Case of the Day: Core VCT plc v. Hensley

The case of the day is Core VCT plc v. Hensley (D.D.C. 2015). Core VCT and Core VCT IV plc, both of which were English public limited companies with their principal places of business in London, sued James Hensley in the High Court. They obtained a default judgment there, and they brought an action for recognition of the judgment in the District of Columbia. Hensley moved to dismiss for want of subject-matter jurisdiction. The magistrate judge recommended dismissal, and Core VCT objected.

In the complaint, Core VCT had alleged that the court had jurisdiction because it was an alien and Hensley was a citizen of Illinois. But Hensley claimed that his domicile was in Monaco. By way of background, if the amount in controversy is greater than $75,000, then the federal court has jurisdiction over actions between “citizens of a state and citizens or subjects of a foreign state.” But the statute does not vest the courts with jurisdiction in disputes between two aliens. And for purposes of the statute, a United States citizen is not a “citizen of a state” unless he resides, i.e., has his domicile, in that state. So a US citizen residing abroad is treated as an alien for purposes of the statute. Thus the question of Hensley’s domicile was dispositive, since diversity of citizenship is the only basis on which Core VCT invoked the court’s jurisdiction. 1

The judge agreed with the magistrate judge, who had held an evidentiary hearing, that Hensley’s domicile was in Monaco, and thus he dismissed the action. But it’s worth noting the reason why this was the right outcome. As we’ve noted before, in the United States, state law rather than federal law governs the recognition and enforcment of foreign judgments. Most of the states (and the District of Columbia) have enacted versions of either the UFCMJRA or the UFMJRA, and there is no federal statute governing recognition and enforcement of foreign judgments. So Core VCT could not claim that the federal court had jurisdiction because the action arose under the laws of the United States. It was diversity of citizenship or nothing. 2 Without diversity of citizenship jurisdiction, the court could not proceed. If Core VCT wants to obtain recognition in the District of Columbia, it will have to sue in the DC Superior Court rather than the US District Court.

This is an easy case; but it’s worth pondering particularly in light of an issue I’m going to raise later in the week when I take a look at a recent paper by James E. Pfander and Daniel D. Birk on federal court jurisdiction in non-contentious cases. I’ve previously noted a concern about why the federal courts should have subject-matter jurisdiction of applications for judicial assistance in the taking of evidence under § 1782, at least in cases not implicating the Hague Evidence Convention. The situation under § 1782 is more difficult for a few reasons. First, there is a federal statute that clearly expresses Congress’s intent that the federal courts should have power to hear such applications, so the problem, if there is one, is constitutional rather than statutory. Second, as Pfander and Birk point out, § 1782 applications are frequently not adversarial, raising questions about the federal court’s power to adjudicate. Third, there is a long history of federal courts providing judicial assistance to courts abroad, and just how that history should fit in to our Article III doctrines is unclear. Stay tuned!

Notes:

  1. As an aside, one might wonder why venue lay in the District of Columbia if, as Core VCT argued, Hensley’s domicile was in Illinois. Under the venue statute, venue lies in the district where the defendant resides. Perhaps Core VCT was relying on the provision in the statute permitting an action to be brought in the district “in which a substantial part of the events or omissions giving rise to the claim occurred, or a substantial part of property that is the subject of the action is situated.” We don’t have enough information from the decision to know if this is so. But in any case venue was not an issue in the court’s decision.
  2. I assume that the English judgment was in an action at law and not, for example, in an admiralty case that would force us to confront any of the other more specialized areas of federal court jurisdiction. I also leave aside the special status of the District of Columbia, which of course is not a state and over which Congress has plenary power; I believe the cases hold that actions arising under the laws of the District of Columbia do not arise under the law of the United States for these purposes.

About Ted Folkman

Ted Folkman is a shareholder with Murphy & King, a Boston law firm, where he has a complex business litigation practice. He is the author of International Judicial Assistance (MCLE 2012), a nuts-and-bolts guide to international judicial assistance issues, and of the chapter on service of process in the ABA's forthcoming treatise on International Aspects of US Litigation, and he is the publisher of Letters Blogatory, the Web's first blog devoted to international judicial assistance, which the ABA recognized as one of the best 100 legal blogs in 2012, 2014, and 2015.

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