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Two Florida companies obtained a judgment of $50 million against the Dominican Republic. This was entered as a default judgment because the country failed to respond to the lawsuit. In its appeal before the Eleventh Circuit, the Dominican Republic claimed excusable neglect for failing to respond to the lawsuit.
Apparently, a low-level employee had acted on the country's behalf in deciding not to participate in the legal action. That clerical error almost cost the government $50 million. Fortunately for the Dominican Republic, they were able to raise convincing arguments on appeal before the 11th Circuit.
What About Sovereign Immunity?
The Florida companies, Architectural Ingenieria Siglo and Sun Land RGITC, brought a lawsuit against the Dominican Republic for breach of contract and unjust enrichment. The parties had undertaken a large-scale canal project that the plaintiffs suddenly abandoned.
The lawsuit was brought under the Foreign Sovereign Immunities Act (FSIA), which facilitates jurisdiction over a foreign state while providing the foreign state with a presumption of immunity in United States courts. In the contracts between the parties, the Dominican Republic had waived their sovereign immunity language that was "clear and unambiguous."
Despite this waiver, the Eleventh Circuit found that the district court erred in one respect: the plaintiffs failed to overcome the FSIA presumption that "a foreign state and its instrumentalities are separate legal entities."
In other words, the plaintiffs had never demonstrated why the Dominican Republic was not a separate legal entity from the foreign company that signed off on the contracts. On this issue, the circuit court granted the Dominican Republic's Rule 60(b)(4) motion to vacate for voidness.
Default Judgment vs. "Excusable Neglect"
When the plaintiffs filed the suit, the defendants provided "adamant and repeated refusals to participate in the legal process." Given this fact, the district court entered a default judgment.
Taking a closer look at the facts, the circuit court found that the defendants (apparently) had never been made aware of the legal action. All initial communications by the defendants had been made by an assistant who had held her position for only three months (before which she was a low-level clerk).
Where the district court found that this person was senior enough to represent the interests of the defendants, the circuit court disagreed. Since no one in a management position had been aware of the lawsuit, the court agreed that the clerical error qualified as "excusable neglect."