Africa Growth Corporation v. Republic of Angola

UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLUMBIA
AFRICA GROWTH CORPORATION,
Plaintiff,
v. Civil Action No. (BAH) 17-2469
REPUBLIC OF ANGOLA, et al., Chief Judge Beryl A. Howell
Defendants.
MEMORANDUM OPINION
Africa Growth Corporation (“AFGC”), a U.S.-based, publicly-listed corporation which,
through its subsidiaries, builds and manages apartments in Angola’s capital city, Luanda,
initiated this suit against five Angolan government officials and the Republic of Angola to
recover damages for an alleged series of brazen fraudulent actions culminating in the outright
seizure and ongoing occupation of AFGC’s properties by a General of the Angolan military, his
son, and their “heavily-armed security detail.” Angolan courts have enjoined two of the
defendants, Angolan General Antonio Francisco Andrade (“General Andrade”), and his son,
Angolan Army Captain Miguel Kenehele Andrade (“Captain Andrade”), from occupying
AFGC’s properties—but to no avail. General Andrade and Captain Andrade have allegedly
claimed “immunity” from these Angolan court orders, and the police, for their part, have been of
limited service in enforcing the orders, allegedly because the police have been directed by none
other than General Andrade’s own daughter, Angolan State Prosecutor Natasha Andrade Santos
(“Prosecutor Andrade”), not to enforce the Angolan court’s orders.1
1
The plaintiff alleges in the Complaint that the defendants General Francisco Higino Lopes Carneiro
(“Governor Carneiro”), General Joao Maria de Sousa (“Attorney General de Sousa”), and General Andrade are
“immune from prosecution in Angolan courts.” Compl. ¶¶ 8, 9, 10.
1
The issue now before the Court is whether default judgment should be entered against
Angola and the five Angolan government officials due, with respect to Angola, its eight-month
delay in responding to plaintiff’s complaint, and with respect to the individual defendants, their
continuing failure to respond. The plaintiff filed the Complaint, ECF No. 1, on November 15,
2017, and effectuated service on the defendants, on December 26, 2017, by sending a copy of the
summons and complaint and a notice of suit, pursuant to the procedure for service upon foreign
states established by the Foreign Sovereign Immunities Act (“FSIA”), 28 U.S.C. § 1608(a)(3).
See Return of Service/Affidavit, ECF No. 20.
An answer to plaintiff’s Complaint was due by February 24, 2018, for any defendant on
whom service was properly made, which, as discussed below, is at issue for the individual
defendants. No answer was timely filed. Shortly after this deadline, on February 27, 2018, the
plaintiff filed an Affidavit in Support of Default, ECF No. 21, and the Clerk of Court entered
Default, ECF No. 22, on March 2, 2018. The plaintiff then, on March 15, 2018, filed a Motion
for Default Judgment (“Pl.’s Mot.”), ECF No. 23. Nearly six months later, on September 4,
2018, Angola filed a Motion to Set Aside Default (“Def.’s Mot.”), ECF No. 28. For the reasons
set forth below, the plaintiff’s motion for entry of default judgment is denied as to all defendants,
and Angola’s motion to set aside the default entered by the Clerk of the Court is granted.
I. BACKGROUND
AFGC operates in Angola through three subsidiaries: AGPV Lda (“AGPV”), Illico Lda
(“Illico”), and Maximilio Lda (“Maximilio”) (collectively, “AFGC’s Subsidiaries”). Compl. ¶
31, 35. As alleged in the Complaint, beginning in January 2015, AFGC invested in four “high-
end apartment complexes” in Luanda that were managed by AFGC’s Subsidiaries. Id. ¶¶ 2, 27,
2
29.2 According to the plaintiff, the defendants’ conspiracy to convert AFGC’s Subsidiaries’
assets began in October 2016 when General Andrade “fraudulently prepare[d] Powers of
Attorney, which purported to appoint one of [General Andrade’s] associates as the shareholder
representative of two of Illico’s parent companies, [AGPV] and [Maximilio], but in truth and in
fact, were forged at the direction of General Antonio Andrade.”3 Id. ¶ 35; see also Decl. of
Brenton Kuss (“Kuss Decl.”) ¶ 13, ECF No. 23-2. General Andrade next had the “current and
lawful director and Gerente (General Manager) of Illico” dismissed, and the General himself
“unlawfully appoint[ed]” “as the director and Gerente of Illico, with signature authority over the
Illico bank accounts.” Id. ¶ 36. The plaintiff claims these acts of “corporate fraud” were not
immediately discovered because “they were not properly recorded and documented in the official
corporate registry of Angola, which is administered by the Angolan Guichet Unico de Empresa
(“GUE”), a division of the Angolan Ministry of Justice.” Id. ¶ 37.
Once in control of Illico’s bank accounts, General Andrade allegedly transferred money
from Illico to his own privately-owned companies. Id. ¶ 40. The plaintiff alleges that he “then
intimidated the AFGC staff with threats of violence and demanded that they recognize him as the
owner and managers of” AFGC’s assets, and “demanded that the local AFGC staff cut off all
contact with AFGC senior management going forward.” Id. ¶ 41. In the ensuing power struggle,
AFGC claims it was able to briefly reinstall its lawful director and Gerente of Illico in July 2017,
but that General Andrade conspired with his son, Captain Andrade, his daughter, Prosecutor
2
The record is unclear whether construction of the fourth apartment building has been completed. The CEO
of AFGC states that AFGC’s Subsidiaries “acquired title to two residential real estate properties, consisting of three
buildings (named “Isha 1”, “Isha 2” and “Pina”) that were divided into 64 apartments and 7 offices,” and that
“[f]ollowing the acquisition of Isha 1, Isha 2 and Pina, AFGC began the construction of a fourth building (named
“Isha 2.5”), which contained another 40 apartments.” Decl. of Brenton Kuss (“Kuss Decl.”) ¶¶ 5, 7, ECF No. 23-2.
3
The plaintiff claims that AGPV and Maximilio are both parent companies of Illico, Compl. ¶ 35, whereas
Angola claims that AGPV is the parent company of both Maximilio and Illico, Def.’s Reply at 5. Angola also
claims that AGPV is owned by the British Virgin Islands company ABV Holding Ltd, which is in turn owned by the
Bermuda company Africa International Capital Ltd, which, finally, is owned by AFGC. Id.
3
Andrade, and GUE to have himself unlawfully reappointed, in August 2017, as director and
Gerente of AFGC’s Subsidiaries, and moreover, amended AFGC’s Subsidiaries’ bylaws “to
name himself as the sole legal representative and signatory,” thereby “assum[ing] full and
complete control” of AFGC’s Subsidiaries. Id. ¶ 46-50.
When AFGC representatives arrived in Angola in August 2017 to reassert control over
AFGC’s Subsidiaries’ properties, they encountered General Andrade’s “heavily-armed security
detail,” which forced them “to withdraw from their own properties.” Id. ¶¶ 51-56. The plaintiff
alleges that “the Angolan police refused (at the express direction of [Prosecutor Andrade]) to
take any action,” “thereby aiding and supporting the ongoing conspiracy … to deprive AFGC of
lawful ownership and possession of” its properties. Id. ¶ 58. As of the filing of plaintiff’s
Complaint, the “heavily-armed security detail continue[d] [] to patrol the buildings … with
exposed AK 47 assault rifles.” Id. ¶ 61.
The plaintiff’s allegations also implicate the Attorney General of Angola, General Joao
Maria de Sousa (“Attorney General de Sousa”), who allegedly conspired with Prosecutor
Andrade “to prevent legitimate law enforcement action from being taken in support of AFGC,”
id. ¶ 81, and the Governor of the Province of Luanda, General Francisco Higino Lopes Carneiro
(“Governor Carneiro”), who allegedly acted “in furtherance of the unlawful conspiracy,” id. ¶
99, by signing and approving “the fraudulent transfer of the surface rights” to AFGC’s
Subsidiaries’ properties “through a transfer of title from Illico to Prosecutor Natasha Andrade,”
id. ¶ 97.
Finally, the plaintiff claims that Angola itself “has aided and abetted in the unlawful
conspiracy by enabling [General Andrades, Captain Andrade, and Prosecutor Andrade (the
“Andrades”)] to convert AFGC’s property through acts of fraud, illegally asserted control, and
4
intimidation,” and “has fostered an expectation of total impunity on the part of the [Andrades],
who have had no reason to fear they will be brought to judgment in Angola for their bad acts.”
Id. ¶ 120.
The plaintiff apparently obtained from the Angolan Provincial Court “a written verdict
and opinion, dated November 23, 2017 (the “November 23 Order”),” in which “the Angolan
Court specifically held” that AFGC’s Subsidiaries’ assets “had been taken ‘unlawfully and by
exercising violence’ against AFGC’s representatives in Angola.” Pl.’s Mem. Supp. Mot. Default
Judgment (“Pl.’s Mem.”) at 13, ECF No. 23-1. Nonetheless, “the Angolan government took no
action to enforce the November 23 Order.” Id. Accordingly, “[o]n December 19, 2017, an
amended verdict and decision of the Angolan Provincial Court (the “December 19 Order”) was
issued, which reaffirmed the unlawful and violent nature of the [Andrades’] conduct and ordered
the Angolan police to return to the [properties] to evict the [Andrades].” Id. at 14. Allegedly,
the police enforced the December 19 Order, but “once the police departed,” the Andrades
returned. Id. at 14.
Thus, as of March 15, 2018, the plaintiff alleges that it “remains: (i) without possession
or control of [AFGC’s Subsidiaries’ properties]; (ii) without recorded and secured legal title to
[AFGC’s Subsidiaries’ properties] returned and cleared of all fraudulently obtained
encumbrances on title; (iii) without possession or control of [AFGC’s Subsidiaries]; (iv) without
possession or control of the corporate bank accounts of [AFGC’s Subsidiaries]; and (v) without
the ability to collect rental income from [AFGC’s Subsidiaries’ properties]. Id. at 14. In the ten-
count Complaint, alleging expropriation in violation of International Law (Count I), violations of
the Racketeer Influenced and Corrupt Organizations (“RICO”) Act, 18 U.S.C. § 1962(c), (d)
(Counts II, III), conspiracy to commit fraud and conversion, and conversion (Count IV, VII),
5
tortious interference with contract (Count V), defamation (Count VI), accounting (Count IX),
and an Action to Impose Constructive Trust (Count X), AFGC seeks “damages in excess of
US$55 million owed to AFGC arising from Defendants’ unlawful conspiracy, expropriation, and
outright theft of AFGC’s properties and rental income in Angola.” Compl. ¶ 1.
II. LEGAL STANDARD
The Federal Rules of Civil Procedure “provide for default judgments . . . [to] safeguard
plaintiffs ‘when the adversary process has been halted because of an essentially unresponsive
party,’” and to protect “‘the diligent party . . . lest he be faced with interminable delay and
continued uncertainty as to his rights.’” Mwani v. bin Laden, 417 F.3d 1, 7 (D.C. Cir. 2005)
(quoting Jackson v. Beech, 636 F.2d 831, 836 (D.C. Cir. 1980)). Pursuant to Federal Rule of
Civil Procedure 55(a), “[w]hen a party against whom a judgment for affirmative relief is sought
has failed to plead or otherwise defend, and that failure is shown by affidavit or otherwise, the
clerk must enter the party’s default.” FED. R. CIV. P. 55(a); see 10A CHARLES ALAN WRIGHT ET
AL., FEDERAL PRACTICE AND PROCEDURE § 2682 (4th ed. 2018) (“When the prerequisites of Rule
55(a) are satisfied, an entry of default may be made by the clerk without any action being taken
by the court . . . [as long as] the clerk [has] examine[d] the affidavits filed and [found] that they
meet the requirements of Rule 55(a).”). “[A]n entry of default is merely a formal matter and
does not constitute the entry of judgment.” Id.
Rule 55 further provides that a “court may set aside [a clerk’s] entry of default for good
cause.” FED. R. CIV. P. 55(c). The D.C. Circuit has made clear that courts, when exercising their
discretion under Fed. R. Civ. P. 55(c), should consider “‘whether (1) the default was willful, (2)
a set-aside would prejudice plaintiff, and (3) the alleged defense was meritorious.’” Mohamad v.
Rajoub, 634 F.3d 604, 606 (D.C. Cir. 2011) (quoting Keegel v. Key West & Caribbean Trading
6
Co., 627 F.2d 372, 373 (D.C. Cir. 1980)). The three factors articulated in Keegel are not
exclusive, however, as the “good cause” standard of Rule 55(c) “is designed to empower courts
to consider the equities that specially arise in a given case.” Gilmore v. Palestinian Interim Self-
Government Authority, 843 F.3d 958, 966 (D.C. Cir. 2016). The D.C. Circuit has also “stressed
a foreign sovereign’s interest—and [the Court’s] interest in protecting that interest—in being
able to assert defenses based on its sovereign status,” FG Hemisphere Associates, LLC v.
Democratic Republic of Congo, 447 F.3d 835, 838 (D.C. Cir. 2006), because “‘[i]ntolerant
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,’” id. at 838-839 (quoting Practical Concepts Inc. v. Republic of Bolivia, 811 F.2d
1543, 1551 n.19 (D.C. Cir. 1987)).
III. DISCUSSION
Notwithstanding the fact that Angola has stepped forward to litigate the extraordinary
claims alleged in this lawsuit, the plaintiff persists in pursuit of a default judgment. Angola
counters that the Keegel factors, and its status as a sovereign nation, militate against an entry of
default judgment. Although Angola’s default was surely willful, see infra in Part III.B, the Court
finds that all other relevant factors weigh in favor of setting aside the entry of default against
Angola.
As for the five individual defendants named in the Complaint: the three Andrades, plus
Attorney General de Sousa and Governor Carneiro (collectively, the “Individual Defendants”),
none has yet appeared or made any filings to set aside the entry of default, to contest the Court’s
jurisdiction, or otherwise. Nonetheless, the plaintiff has failed to satisfy its burden to make some
7
prima facie showing of the Court’s jurisdiction over the individuals. Therefore, the plaintiff’s
motion for a default judgment against the Individual Defendants must be denied.
A. The Plaintiff Has Not Established Personal Jurisdiction over the Individual
Defendants
Before entering default judgment against a defendant, the Court is obligated to assure
itself of personal jurisdiction. Mwani, 417 F.3d at 6 ("[A] court should satisfy itself that it has
personal jurisdiction before entering judgment against an absent defendant."). In this regard, the
plaintiff seeking a default judgment bears the burden to make a prima facie showing that the
Court has personal jurisdiction over the Individual Defendants. Id at 7. Effective service of
process is essential to establishing the Court’s personal jurisdiction. See Mann v. Castiel, 681
F.3d 368, 372 (D.C. Cir. 2012) (“Under the federal rules enacted by Congress, federal courts
lack the power to assert personal jurisdiction over a defendant ‘unless the procedural
requirements of effective service of process are satisfied.’” (quoting Gorman v. Ameritrade
Holding Corp., 293 F.3d 506, 514 (D.C. Cir. 2002))).
The plaintiff purports to have served the Individual Defendants according to the
procedure established by the FSIA for serving a “foreign state,” which means, in this case, via
the Angolan Minister of Foreign Affairs. See 28 U.S.C. § 1608(a)(3). This was, however, the
wrong procedure to use. The FSIA defines a “foreign state” to include “a political subdivision of
a foreign state or an agency or instrumentality of a foreign state.” 28 U.S.C. § 1603(a). In turn,
the FSIA defines “agency or instrumentality of a foreign state” as “any entity” (1) “which is a
separate legal person, corporate or otherwise, and” (2) “which is an organ of a foreign state or
political subdivision thereof, or a majority of whose shares or other ownership interest is owned
by a foreign state or political subdivision thereof” and (3) “which is neither a citizen of a State of
the United States … nor created under the laws of any third country.” Id. § 1603(b).
8
The Supreme Court has clarified that the term “agency or instrumentality” in the FSIA
does not refer to natural persons, such as individual government officials. See Samantar v.
Yousuf, 560 U.S. 305, 319 (2010) (“Reading the FSIA as a whole, there is nothing to suggest we
should read ‘foreign state’ in § 1603(a) to include an official acting on behalf of the foreign state,
and much to indicate that this meaning was not what Congress enacted.”). Therefore, in the
instant case, while Angola is indisputably a “foreign state,” the Individual Defendants are not.
Service on the Individual Defendants according to the FSIA procedure for serving foreign states,
rather than the procedure set out in Fed. R. Civ. P. 4(f) for serving individuals in foreign
countries, does not constitute proper service on the Individual Defendants.
Personal jurisdiction over the Individual Defendants fails for a second reason as well,
argues Angola, because the individual defendants do not have the necessary “minimum contacts”
with the District of Columbia. Def.’s Mem. Supp. Mot. Set Aside Default Entry (“Def.’s
Mem.”) at 2 n.2, ECF No. 28-1 (citing Williams v. Romarm, S.A., 756 F.3d 777, 783-84 (D.C.
Cir. 2014)).4 Angola notes that “the only contact with the District of Columbia alleged in the
Complaint pertains to a single Defendant—[Captain Andrade]—and consists only of his
allegedly sending a letter to the Securities and Exchange Commission, supposedly copied to
others[,]” but that “[n]o contacts with this District are alleged with respect to any of the other
four individual Defendants.” Id.
4
The memoranda filed in support of the motions before the Court are docketed twice and, to simplify
citation, only one of the duplicate memoranda is referenced. Angola’s identical Memoranda in Support of its
Motion to Set Aside Default, ECF No. 28-1, and in Opposition to Plaintiff’s Motion for Default Judgment, ECF No.
29, will be referenced only by the memorandum at ECF No. 28-1. The plaintiff’s identical Reply in Support of its
Motion for Default Judgment, ECF No. 33, and Memorandum in Opposition to Angola’s Motion to Set Aside
Default, ECF No. 34, will be referenced by only the memorandum at ECF No. 33. Finally, Angola’s identical Reply
in Support of its Motion to Set Aside Default, ECF No. 35, and Surreply in Opposition to Plaintiff’s Motion for
Default Judgment, ECF No. 36, will be referenced only by the memorandum at ECF No. 35.
9
Angola noted the plaintiff’s defective service of process, the lack of “minimum
contacts,” and the Court’s resulting lack of personal jurisdiction over the Individual Defendants
in its briefing to set aside entry of default, see Def.’s Mem. at 2 n.2, but AFGC has barely
acknowledged these arguments, much less addressed them in its briefing, see Pl.’s Reply Supp.
Mot. Default Judgment (“Pl.’s Reply”) at 4, ECF No. 33 (insisting that “AFGC effected service
of process on Angola and the other defendants … in strict compliance with the FSIA’s
provisions for service of process upon a foreign state,” but not addressing Angola’s argument
that the Individual Defendants are not foreign states pursuant to the FSIA). Thus, because
service of process pursuant to the FSIA was clearly defective, and because the plaintiff has
offered no alternative theory or explanation as to how the Court would have personal jurisdiction
over the Individual Defendants, final default judgment may not be entered against the Individual
Defendants. The plaintiff will be directed to show cause why these Individual Defendants
should not be dismissed.
B. Angola Has Satisfied the Keegel Factors
Angola has made an adequate showing that entry of default should be vacated in this case
and the plaintiff’s motion for default judgment denied. Each of the Keegel factors are addressed
seriatim.
1. Angola’s Default Was Willful
The first Keegel factor requires consideration of whether the default was willful.
Supporting a claim that Angola’s default was willful is the simple fact than eight months lapsed
between Angola receiving service of process, on December 26, 2017, and showing up to litigate
the matter, by filing a motion to set aside the entry of default, on September 4, 2018. As the
plaintiff notes, Angola has experience litigating before this Court, including with the same legal
counsel retained for the instant matter, such that “Angola cannot claim lack of understanding
10
regarding the legal process or difficulties or delays in selecting legal counsel.” Pl.’s Reply at 7.
The plaintiff argues that these facts alone are sufficient to infer willful default. Angola contends,
however, that it “did not intend to willfully default,” Def.’s Mem. at 28, and explains that the
delay was “‘[d]ue to the need to secure the necessary approvals’ for the Angolan Government to
retain counsel,” Def.’s Reply Supp. Mot. Set Aside Default Entry (“Def.’s Reply”) at 14, ECF
No. 35 (citing Decl. of Eduarda Passos de Carvalho Rodrigues Neto (“Rodriques Neto Decl.”) ¶
4, ECF No. 35-1).
As Angola notes, uncertainties around the willfulness of default are frequently resolved
in the defaulting party’s favor, even where that party’s explanation had slim or no supporting
evidence. See, e.g., Biton v. Palestinian Interim Self Government Authority, 233 F. Supp. 2d 31,
33 (D.D.C. 2002) (finding default not willful because, even though “[d]efendants’ explanations
for their delay sound [] like hollow excuses,” and defaulting party had “supplied no specifics—
by proffer, affidavit, or otherwise—to support [its] claims,” but nonetheless “accord[ing] the
defendants the benefit of the doubt”); Capital Yacht Club v. Vessel Aviva, 228 F.R.D. 389, 394
(D.D.C. 2005) (finding default not willful even though the defaulting party had “not produced
any evidence corroborating” its explanation, leaving the court “with a doubt (albeit a very strong
doubt)” about the defendant’s willfulness). Here, by contrast, Angola has supported its
explanation—that Angola needed additional time to secure approvals within the Angolan
Government—with a sworn affidavit from the Deputy Attorney General of Angola. See
generally Rodriques Neto Decl.
Angola’s explanation and accompanying affidavit, however, do not save Angola from a
finding of willful default. Angola’s eight-month delay, from a nation with experience litigating
in this district is inexcusable. See, e.g., de Sousa v. Embassy of Republic of Angola, 229 F. Supp.
11
3d 23 (D.D.C. 2017); de Sousa v. Embassy of the Republic of Angola, 267 F. Supp. 3d 163
(D.D.C. 2017); Phoenix Consulting, Inc. v. Republic of Angola, 35 F. Supp. 2d 14 (D.D.C.
1999). The consequence of a party failing timely to participate in pending litigation against it,
ignoring the deadlines set by the general rules governing federal judicial proceedings and the
Court, and using its own timetable instead, shows disrespect for the Court and the legal system in
which the Court operates, and results in delays in resolving cases to the detriment of the judicial
system and other litigants. See Pakter v. Janou Pakter, LLC, 2018 U.S. Dist. LEXIS 56869, at
*8 (S.D.N.Y. Apr. 3, 2018) (noting that “allowing a case to languish for nearly nine months … is
deeply disrespectful to the Court [and] opposing counsel”). Angola’s delay is willful.
A finding of willful default, however, is not dispositive. A Court may set aside an entry
of default even where a defendant defaulted willfully, where other factors weigh in favor of
granting vacatur. See Shatsky v. Syrian Arab Republic, 795 F. Supp. 2d 79, 81-82 (D.D.C. 2011)
(vacating entry of default despite finding defendants’ default to be willful where the “Court is
now convinced that [defendants] are truly committed to litigating this matter” and the other
Keegel factors weigh in favor of vacatur); Haskins v. U.S. One Transp., LLC, 755 F. Supp. 2d
126, 130 (D.D.C. 2010) (setting aside entry of default even though defendant’s default was “at
least to some degree, willful”); Gilmore v. Palestinian Interim Self-Gov’t Auth., 675 F. Supp. 2d
104, 108-09 (D.D.C. 2009) (finding defendants’ default to be willful and part of a “deliberate
litigation strategy,” but nevertheless granting vacatur of the entry of default); Owens v. Republic
of Sudan, 374 F. Supp. 2d 1, 10 n.5 (D.D.C. 2005) (setting aside the entry of default despite
finding Sudan’s delay to be “at least somewhat willful”).
12
2. An Order to Set Aside the Entry of Default Would Not Prejudice the
Plaintiff
The second Keegel factor is whether a set-aside would prejudice the plaintiff. The
plaintiff claims that a set-aside would be prejudicial because “Angola may continue to do
nothing, provide no compensation to AFGC for the loss of its substantial investment, and grant
total impunity to the governmental actors and offices responsible for orchestrating the scheme to
completely deprive AFGC of its investment in Angola.” Pl.’s Reply at 8. What the plaintiff
characterizes as “prejudice” is, however, at bottom no different from a mere delay in receiving
the remedy sought. While understandable that the plaintiff wishes to have its allegedly-
expropriated property returned with all deliberate speed, “prejudice” in this context requires
showing some harm beyond mere delay in obtaining such relief. See Haskins v. U.S. One
Transp., LLC, 755 F. Supp. 2d 126, 130 (D.D.C. 2010) (in assessing whether the plaintiff would
be prejudiced by vacating the entry of default, “‘delay in and of itself does not constitute
prejudice’” (quoting KPS & Assocs., Inc. v. Designs by FMC, Inc., 318 F.3d 1, 15 (1st Cir.
2003))).
To the extent that the plaintiff claims prejudice because denial of its motion for default
judgment may make a favorable judgment elusive in this matter is simply irrelevant to the
prejudice analysis. “Detriment in the sense that plaintiff will be required to establish the merits
of its claim does not constitute prejudice for purposes of setting aside an entry of default.”
Loveday v. MetLife Inc., No. CV-16-00246-TUC-DTF, 2016 U.S. Dist. LEXIS 194596, at *5 (D.
Ariz. Nov. 1, 2016) (citing Accu-Weather Inc. v. Rueters, Ltd., 779 F. Supp. 801, 802 (M.D.
Penn. 1991)); Bateman v. U.S. Postal Serv., 231 F.3d 1220, 1224-25 (9th Cir. 2000) ("[Non-
defaulting party] would have lost a quick victory … [b]ut such prejudice is insufficient to justify
denial of relief” in setting aside a default judgment); Johnson v. Dayton Elec. Mfg. Co., 140 F.3d
13
781, 785 (8th Cir. 1998) (“As numerous decisions make clear, prejudice may not be found from
… the fact that the defaulting party will be permitted to defend on the merits.”); PNC Bank, Nat'l
Ass'n v. Smith, No. CIV S-10-1916 JAM EFB, 2011 U.S. Dist. LEXIS 146738, at *13-14 (E.D.
Cal. Dec. 21, 2011) (“although setting aside the defaults would require plaintiff to prove its case,
that does not amount to prejudice”).
The lack of prejudice to the plaintiff therefore weighs in favor of granting Angola’s set-
aside motion.
3. Angola’s Defenses Are “Meritorious”
The third Keegel factor is whether the alleged defense is “meritorious.” Importantly,
“meritorious” in this context does not mean “likelihood of success,” see Keegel, 627 F.2d at 374.
Rather—as the parties agree, see Pl.’s Reply at 9; Def.’s Reply at 2—defenses are “meritorious”
for purposes of a set-aside motion “if they contain ‘even a hint of a suggestion’ which, if proven
at trial, would constitute a complete defense.” Keegel, 627 F.2d at 374 (quoting Moldwood
Corp. v. Stutts, 410 F.2d 351, 352 (5th Cir. 1969)); see also Whelan v. Abell, 48 F.3d 1247, 1259
(D.C. Cir. 1995) (A party seeking to set aside an entry of default “is not required to prove a
defense, but only to assert a defense that it may prove at trial.”). Angola’s defenses satisfy this
standard for merit.
Angola claims that the FSIA denies this Court subject-matter jurisdiction over the
plaintiff’s claims because the two FSIA exceptions to sovereign immunity relied upon by the
plaintiff—“expropriation,” see 28 U.S.C. § 1605(a)(3), and "commercial activity,” see id. §
1605(a)(2)—are inapplicable, and the FSIA is “the sole basis for obtaining jurisdiction over a
foreign state in our courts,” Argentine Republic v. Amerada Hess Shipping Corp., 488 U.S. 428,
434 (1989); see also 28 U.S.C. § 1604 (“[A] foreign state shall be immune from the jurisdiction
of the courts of the United States and of the States except as provided in sections 1605 to 1607 of
14
[the FSIA].”); Price v. Socialist People’s Libyan Arab Jamahiriya, 294 F.3d 82, 87 (D.C. Cir.
2002) (“The [FSIA] … confers immunity on foreign states in all cases that do not fall into one of
its specifically enumerated exceptions.”).
Briefly stated, Angola claims that FSIA’s expropriation exception is inapplicable for
three reasons, each of which is independently sufficient to defeat the exception. See Def.’s
Reply at 3-9. First, Angola argues that established case law, Helmerich & Payne Int’l Drilling
Co. v. Bolivarian Republic of Venezuela, Case No. 13-7169, 2018 WL 3901246, at *30 (D.C.
Cir. Aug. 7, 2018), “prohibits a US parent company from raising a claim for expropriation based
upon the taking of property belonging to the US parent company’s foreign subsidiary,” Def.’s
Reply at 4 (quoting Pl.’s Reply at 13 (citing Helmerich & Payne Int’l Drilling Co., 2018 WL
3901246, at *30)). Here, the allegedly-seized properties belonged to Angolan subsidiaries of
companies owned by AFGC, which, according to Angola, means that the alleged injuries cannot
be credited to AFGC for purposes of the expropriation exception. Second, Angola argues that
“expropriation” necessarily requires seizure by a sovereign, but Angola itself played no role in
the alleged seizures, and the actions of those who allegedly seized the properties cannot be
attributed to Angola. See Def.’s Reply at 7. Third, Angola argues that the expropriation
exception is inapplicable because “the buildings alleged to have been expropriated are plainly
not in the United States” and therefore “the required jurisdictional nexus with the United States
is absent.” Def.’s Reply at 9. Angola also argues that the FSIA’s commercial activity exception
is inapplicable because the alleged wrongful taking of a commercial enterprise, even if true,
would not constitute “commercial activity” within the meaning of the FSIA, Def.’s Reply at 10
(citing Rong v. Liaoning Province Gov’t, 452 F.3d 883, 889-90 (D.C. Cir. 2017)), and because
15
the FSIA commercial activity exception requires some “direct effect” in the United States—of
which there is none, see Def.’s Reply at 11.
Deciding the merits of Angola’s jurisdictional defenses under the FSIA is unnecessary
now, but Angola has plainly advanced a plausible defense “which, if proven at trial, would
constitute a complete defense.” Keegel, 627 F.2d at 374. This standard having been satisfied,
the third Keegel factor weighs in Angola’s favor to set-aside the default.
C. As a Foreign Sovereign, Angola Is Entitled to a Presumption against Default
Judgment
As noted, the Keegel factors are not exclusive. See Gilmore, 843 F.3d at 966. Other
considerations, including especially a party’s status as a sovereign nation, should be considered
when deciding a Rule 55(c) motion. See FG Hemisphere Associates, LLC, 447 F.3d at 838
(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); Acree v. Republic of Iraq, 658 F. Supp. 2d 124, 130 (D.D.C. 2009)
(describing “the established preference to avoid granting default judgment against foreign
nations”); Owens, 374 F. Supp. 2d at 9 (noting “a strong presumption against the entry of default
judgment against a foreign state that has appeared in the case and expressed a desire to contest
the claims”). Angola is a sovereign nation and therefore deserves additional leeway now that it
seeks to set aside the entry of default and defend itself in court.
D. Failure to Comply with Local Civil Rule 7(g) Is Excused
Finally, AFGC urges the Court to grant its motion for default judgment because Angola
has failed to comply with Local Civil Rule (“LCvR”) 7(g), which requires that a motion to
vacate an entry of default be “accompanied by a verified answer presenting a defense sufficient
to bar the claim in whole or in part.” Pl.’s Reply at 9-10. Angola counters that the rule is
16
unclear in these circumstances because “Angola’s responsive pleading will not be in the form of
an ‘answer’ but rather a Motion to Dismiss the Complaint for lack of subject-matter jurisdiction
under the FSIA and other threshold defenses.” Def.’s Mem. at 1 n.1.
Indeed, LCvR 7(g) does not, by its plain text, contemplate the possibility that a defendant
may wish to seek dismissal of the complaint rather than file a verified answer. This local
requirement of a verified answer is not required under the Federal Rules of Civil Procedure.
Despite the local rule’s text, “[c]ourts routinely allow defendants to file a motion to dismiss in
place of an answer despite a prior entry of default,” and indeed the “Court is unaware of any
decision in which a court has struck a motion to dismiss following an entry of default because
the motion to vacate the default was filed without an answer.” Owens, 374 F. Supp. 2d at 9
(citing Simpson v. Socialist People’s Libyan Arab Jamahiriya, 326 F.3d 230, 232 (D.C. Cir.
2003) and Harris v. District of Columbia, 159 F.R.D. 315, 317 (D.D.C. 1995)); see also Reading
v. United States, 506 F. Supp. 2d 13, 19 (D.D.C. 2007).
In the instant case, Angola goes a step further by filing neither a verified answer nor a
motion to dismiss along with its set-aside motion. Instead, Angola proposes that it “should be
permitted to file its Motion to Dismiss the Complaint within 21 days of this Court’s order”
setting aside the Clerk’s entry of default. Def.’s Mem. at 30. Angola’s proposed schedule for
filing a dismissal motion adds more delay to compound the delay already incurred by its belated
appearance in this litigation, though other judges of this Court have allowed this approach. See,
e.g., Flanagan v. Islamic Republic of Iran, 190 F. Supp. 3d 138, 149 n.4 (D.D.C. 2016)
(permitting Sudan, per its request, “to file an answer within seven business days of any order
vacating the Default Judgment” (internal quotation marks omitted)); Acree, 658 F. Supp. 2d at
17
127-28 (setting aside entry of default where Iraq proposed a schedule for filing dispositive
motions rather than filing a verified answer).
At any rate, the crux of LCvR 7(g) is to solicit from the defaulting party arguments that
would be “sufficient to bar the claim in whole or in part,” if the Court were to grant the set-aside
motion and allow the litigation to proceed. Here, Angola’s thorough briefing has made its
arguments regarding sovereign immunity under the FSIA abundantly clear. Therefore, denying
Angola’s motion for failure to comply with LCvR 7(g) under these circumstances would not be
in the interest of justice. Angola shall have fourteen days to file its proposed motion to dismiss.
IV. CONCLUSION
For the foregoing reasons, the plaintiff’s Motion for Default Judgment, ECF No. 23, is
denied, and Angola’s Motion to Set Aside Default, ECF No. 28, is granted. In addition, by
December 17, 2018, Angola is directed to file any dispositive motion and the plaintiff is ordered
to show cause as to why plaintiff’s claims against the Individual Defendants, Francisco Higino
Lopes Carneiro, Joao Maria de Sousa, Antonio Francisco Andrade, Miguel Kenehele Andrade,
and Natasha Andrade Santos, should not be dismissed for lack of personal jurisdiction.
An Order consistent with this Memorandum Opinion will be filed contemporaneously.
Date: December 3, 2018
__________________________
BERYL A. HOWELL
Chief Judge
18