Case of the Day: Burgan Express v. Atwood

The case of the day is Burgan Express for General, Trading & Contracting Co. v. Atwood (S.D. Ohio 2012). The plaintiffs were Burgan Express, a Kuwaiti company, and Mahmoud Mohammad Abbas Hajia Khajah, a Kuwaiti national and the owner of Burgan. The defendants were Wolfpack Security Services, Inc., an Ohio corporation, and Mark Anthony Atwood, an Ohio resident and Wolfpack’s owner.

Wolfpack was in the business of providing refrigeration units to the US Marine Corps at forward operating bases in Iraq. When Atwood was looking for start-up capital, he was referred to Hajia. According to Atwood, he borrowed money from Hajira and later repaid the loans, end of story. But according to Hajira, he and Atwood made a contract for a Kuwaiti joint venture between Burgan Express and Wolfpack, under which Burgan Express was to receive 51% of the profits.

Because of the disagreement, in November 2005 Burgan Express sued Atwood and Wolfpack in the Commercial Division of the Kuwaiti Court of First Instance, seeking a declaration that a joint venture agreement existed and a valuation of Burgan Express’s interest in the joint venture. Burgan Express brought a second action against Atwood and Wolfpack for damages. The two cases were consolidated. Later in 2005, the Kuwaiti prosecutor brought a criminal charge of embezzlement against Atwood. Atwood had a Kuwaiti representative and a Kuwaiti lawyer representing him in both the civil and criminal proceedings. He actively participated in the civil proceedings, sometimes in person. In the civil case the court ultimately awarded the plaintiffs more than $15 million in damages. Burgan Express then appealed on the grounds that the damages were insufficient. The appellate court increased the damages to more than $20 million. Atwood and Wolfpack did not appeal to the Court of Cassation.

On the criminal side, the court found Atwood guilty and sentenced him to three years imprisonment. He appealed, but while the appeal was pending he “voluntarily absented himself from Kuwait and has not returned.” The Court of Appeal affirmed the criminal conviction.

Burgan Express and Hajira brought an action seeking recognition and enforcement of the judgment in the Ross County (Ohio) Court of Common Pleas. The defendants removed the case to the District Court.

I think the removal was defective. The sole basis for removal was diversity of citizenship. As a matter of constitutional law this is fine, since the plaintiffs were both aliens and the defendants were both citizens of Ohio. But the removal statute, 28 U.S.C. [section] 1441(b)(2), provides:

A civil action otherwise removable solely on the basis of the jurisdiction under section 1332(a) of this title may not be removed if any of the parties in interest properly joined and served as defendants is a citizen of the State in which such action is brought.

So the judge should have found, sua sponte, that the District Court lacked subject-matter jurisdiction and remanded the case back to the Court of Common Pleas. But I digress.

The plaintiffs moved for summary judgment, and Atwood submitted a declaration in which he averred that his Kuwaiti counsel had told him that he had won the case, and that when he learned that a second action had been filed, his Kuwaiti agent told him that Hajia “had ‘paid off the judges’ with a sum equal to several hundred thousand dollars U.S. to secure reopening of the case.” He claimed he had “fled” Kuwait following “death threats made by” Hajia, but that he paid his lawyers to keep representing him in both the civil and criminal proceedings. After he was convicted, he said his Kuwaiti lawyer told him, “You were in an American in a Muslim court system in the Middle East—what did you expect?” Atwood submitted no documents in support of his claims, though he said he was continuing to seek documentary evidence from abroad.

Ohio has enacted the Uniform Foreign Money Judgments Recognition Act, under which foreign country judgments that are “final, conclusive, and enforceable rendered” are generally entitled to recognition and enforcement. There was no question that the Kuwaiti judgment was final, conclusive, and enforceable, so the question was whether Atwood could satisfy one of the statutory grounds for non-recognition.

The judge rejected Atwood’s due process challenge. The main claim seems to have been that Atwood was not represented at all stages of the appellate proceedings, but the judge noted that as a fugitive during the appellate case Atwood was hardly in a position to make that argument. The court also rejected the argument that the proceedings denied due process because under Kuwaiti law an expert committee rather than the court itself determined the damages. Nor did the judge find persuasive Atwood’s “unsupported” argument that the Kuwaiti justice system is systematically inadequate.

Atwood also argued that the judgment was obtained by fraud, but the only evidence of fraud was a statement by Atwood recounting a statement by Atwood’s Kuwaiti lawyer that Hajira had paid a bribe. In other words, the evidence was mere hearsay, and maybe hearsay upon hearsay depending on how the Kuwaiti lawyer had learned of the supposed bribe.

Atwood argued that the judgment was repugnant to public policy and focused on the fact that he was a US military contractor. The judge found this fact irrelevant.

Atwood argued that Kuwaiti courts do not enforce US judgments. The judge noted that it would be within his discretion, under the UFMJRA, to recognize the Kuwaiti judgment anyway, but he also noted that under Article 199 of Kuwait’s Civil and Commercial Pleading Law, Kuwaiti courts can recognize and enforce foreign judgments on conditions roughly similar to the conditions of the UFMJRA itself.

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