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Smart Summary

Factual and Procedural Background

The appellants are four Greek brothers who founded and operated the Theodoros Vagenas Brothers Cotton Gin Company ("Vagenas"). In 1977, Vagenas contracted with Continental Gin Company and its parent Allied Products Corporation (collectively "Continental") to deliver and erect a cotton ginning factory in Trikala, Greece. The contract was modified to require delivery and installation by November 28, 1978, with Continental agreeing to compensate Vagenas for any delay beyond that date. The factory became operational only on October 10, 1979.

In 1980, Vagenas sued Continental in the Multimember First Instance Court of Justice of Tikala, Greece, seeking compensation for delay and lost profits. On January 3, 1981, the Greek court entered a declaratory judgment in favor of Vagenas, which under Greek law was not enforceable but intended to induce settlement negotiations. After unsuccessful settlement efforts, Vagenas pursued an enforceable "affirmative judgment." In September 1985, the Greek court found Continental in default and awarded damages with interest.

Vagenas then filed an action in the United States District Court for the Middle District of Alabama to enforce the Greek judgment and moved for summary judgment. Continental responded with a motion for judgment on the pleadings, arguing lack of personal jurisdiction and that the statute of limitations barred enforcement. The district court held that a two-year Alabama statute of limitations applied and barred the suit, rejecting appellants' arguments based on international comity and a treaty between the United States and Greece. The Greek brothers appealed this ruling.

Legal Issues Presented

  1. Whether the district court erred in applying a two-year statute of limitations under Alabama law to an action enforcing a foreign judgment.
  2. Whether a twenty-year statute of limitations applicable to domestic sister state judgments should apply to enforcement of a foreign judgment under the relevant treaty between the United States and Greece.
  3. Whether the treaty between the United States and Greece mandates nondiscriminatory treatment of Greek nationals in enforcing foreign judgments in U.S. courts.

Arguments of the Parties

Appellants' Arguments

  • The district court should have applied a twenty-year statute of limitations analogous to that for enforcing sister state judgments under Alabama law, rather than the two-year residual statute.
  • The United States-Greece Friendship, Commerce and Navigation Treaty requires nondiscriminatory treatment of Greek nationals, elevating foreign judgments from Greece to the status of sister state judgments for enforcement purposes.

Appellees' Arguments

  • The two-year residual statute of limitations in Alabama applies to actions not otherwise specified, including enforcement of foreign judgments.
  • This action is not contractual but rather a tort-like claim for failure to satisfy an obligation, thus falling under the two-year limitation for injuries to person or rights not arising from contract.

Table of Precedents Cited

Precedent Rule or Principle Cited For Application by the Court
Pullman-Standard v. Swint, 456 U.S. 273 (1982) Standard of plenary review for questions of law. The court applied plenary review to the statute of limitations issue on appeal.
Erie Railroad Co. v. Tompkins, 304 U.S. 64 (1938) Federal courts apply forum state's statute of limitations in diversity cases. The court applied Alabama's statute of limitations as the forum state's law.
Volkswagenwerk Aktiengesellschaft v. Schlunk, 486 U.S. 694 (1988) Treaty provisions as supreme law preempting conflicting state law. The court held the treaty preempted state law if discriminatory but found no conflict here.
United States v. Burke, ___ U.S. ___, 112 S.Ct. 1867 (1992) Definition and distinction between tort and contract claims. The court rejected appellees' characterization of the action as tort, affirming it arose from contract.

Court's Reasoning and Analysis

The court analyzed the applicable statute of limitations under Alabama law because the case is before the federal court on diversity jurisdiction. Alabama law does not provide a specific limitations period for enforcing foreign country judgments. The district court applied a two-year residual statute, which the appellants challenged.

The court examined the 1951 United States-Greece Friendship, Commerce and Navigation Treaty, which mandates nondiscriminatory treatment of nationals and companies of either party in access to courts and enforcement of rights. Because the treaty elevates Greek foreign judgments to the status of sister state judgments, the court determined that the twenty-year statute of limitations applicable to sister state judgments under Alabama law must also apply to enforcement of the Greek judgment.

The appellees' argument that the residual two-year statute applied because the action was tort-like was rejected. The court recognized the long-standing legal distinction that the claim arose from contract, not tort. Even if the residual statute applied, its imposition would conflict with the treaty's nondiscrimination mandate, thus the treaty precludes applying the shorter limitation period.

Accordingly, the court held that the twenty-year limitation period under Alabama Code § 6-2-32 governs the enforcement action, ensuring equal treatment of foreign judgments from Greece and sister state judgments.

Holding and Implications

The court VACATED the district court's judgment and REMANDED the case for further proceedings consistent with the application of the twenty-year statute of limitations.

The direct effect is that the appellants' action to enforce the Greek judgment is not barred by the two-year residual limitations period but is timely under the twenty-year period applicable to domestic sister state judgments. No new precedent beyond applying the treaty to require nondiscriminatory treatment was established.

DIMITRIOS TH. VAGENAS, SPYRIDON TH. VAGENAS, CHRYSOSTOMOS TH. VAGENAS, AND CONSTANTINOS TH. VAGENAS, PLAINTIFFS-APPELLANTS, v. CONTINENTAL GIN COMPANY; CONTINENTAL EAGLE CORPORATION, AND ALLIED PRODUCTS CORPORATION, DEFENDANTS-APPELLEES.

FAY, Circuit Judge:

This is an action by four Greek brothers to enforce a judgment entered by a Greek court against a contractor. The district court, upon a motion for judgment on the pleadings, held the action barred by a two year statute of limitations under the Alabama Code, and from this order the Greek brothers appeal. For the reasons that follow, we VACATE and REMAND for further proceedings because the district court should have applied a twenty year limitations period.

FACTUAL AND PROCEDURAL BACKGROUND

The appellants, four brothers who founded and operated the Theodoros Vagenas Brothers Cotton Gin Company (hereinafter "Vagenas"), seek to enforce a judgment rendered by a Greek court against Continental Gin Company of Prattville, Alabama, and its parent, Allied Products Corporation (hereinafter referred to together as "Continental"). In 1977, Vagenas contracted with Continental to deliver and erect a cotton ginning factory in Trikala, Greece. The parties subsequently modified the contract to provide for the delivery and installation of the factory no later than November 28, 1978. Continental agreed to compensate Vagenas for every day of delay beyond that date.

The factory did not become operational until October 10, 1979. In 1980 Vagenas filed suit in the Multimember First Instance Court of Justice of Tikala, Greece, against Continental to recover the compensation provided for by the contract and the loss of profits suffered due to the delayed installation of the factory. On January 3, 1981, the Greek court entered a declaratory judgment in favor of Vagenas. Under Greek law and procedure, however, this declaratory judgment is not enforceable, but is intended as a means to induce settlement negotiations. Following a period of unsuccessful negotiations between the parties to settle the matter, and in accord with Greek procedure, Vagenas pursued the claim against Continental seeking an enforceable "affirmative judgment." In September, 1985, the Greek court found Continental in default of its contract with Vagenas and awarded the appellants damages for lost profits, contract damages and court costs, all with interest at the lawful rate until the judgment is satisfied.

Vagenas filed an action to enforce the foreign judgment in the Middle District of Alabama and moved for summary judgment. Continental responded with a motion for judgment on the pleadings, arguing that the Greek judgment was unenforceable because the court lacked in personam jurisdiction, and because the statute of limitations for enforcing the judgment had run. The district court found the latter defense dispositive. Because Alabama law does not provide a specific limitations period for actions to enforce foreign judgments, the court held a two year "residual" limitation statute barred the suit, 789 F. Supp. 1137. The district court rejected appellants' arguments that it should recognize the principles of international comity as emphasized in a treaty between the United States and Greece. Alternatively, they argued that the code section setting a twenty year time limit for enforcement of sister state judgments should govern the action because enforcement actions regarding sister state and foreign country judgments are of the same essential nature and bear a close substantive relationship with each other.

DISCUSSION

Vagenas contends the district court erred in applying the two year statute of limitations to the Greek judgment, instead of a twenty year statute relating to domestic judgments. Our review is plenary as the question on appeal is purely one of law. See Pullman-Standard v. Swint, 456 U.S. 273, 287, 102 S.Ct. 1781, 1789, 72 L.Ed.2d 66 (1982). This cause is before the court by virtue of diversity jurisdiction pursuant to 28 U.S.C. § 1332, therefore, we must apply the limitations period of the forum state. Erie Railroad Co. v. Tompkins, 304 U.S. 64, 78, 58 S.Ct. 817, 822, 82 L.Ed. 1188 (1938). Because the treaty between the United States and Greece elevates the foreign judgment to the status of a sister state judgment, we hold that twenty years is the proper limitation period for this action under Alabama law.

In 1951 the United States and Greece signed the Friendship, Commerce and Navigation Treaty, 5 U.S.T. 1829 [hereinafter Friendship Treaty], in which the United States agreed to treat Greek nationals pursuing their rights in our courts in a nondiscriminatory manner. Article VI, section 1, in pertinent part provides: "Nationals and companies of either Party shall be accorded national treatment and most-favored-nation treatment with respect to access to the courts of justice . . . in all degrees of jurisdiction, both in pursuit and in defense of their rights." Friendship Treaty, art. VI, 5 U.S.T. at 1851. Article XXIV, section 1, defines national treatment as that treatment which is "accorded within the territories of a Party upon terms no less favorable than the treatment accorded therein, in like situations, to nationals, companies, products, vessels or other objects, as the case may be, of such Party." Id., art. XXIV, 5 U.S.T. at 1907. A foreign national is not exempt from state regulation if the law is applied equally to nationals, companies, products, etc., of both the United States and Greece. See id. Because the Friendship Treaty is the supreme law of the land, U.S. CONST. art. VI, it effectively obligated the states to afford a Greek national the same treatment that any United States citizen would receive in an action to enforce a judgment. The treaty would preempt Alabama law if there were a conflict, but none exists. See Volkswagenwerk Aktiengesellschaft v. Schlunk, 486 U.S. 694, 699, 108 S.Ct. 2104, 2107, 100 L.Ed.2d 722 (1988).

The parties concede, and we agree, that Alabama does not provide a specific limitations period for actions seeking enforcement of foreign country judgments. There is only one section in chapter six of the code which even references the enforcement of judgments. "Within 20 years, actions upon a judgment or decree of any court of this state, of the United States or of any state or territory of the United States must be commenced." ALA. CODE § 6-2-32 (1975). Reading § 6-2-32 in light of the treaty, a Greek national with a foreign judgment must be given the same twenty year time frame to enforce the judgment as is available to the United States citizen seeking to enforce a sister state judgment in Alabama.

Continental argues the judgment must be governed by the residual provision found in subsection ( l) of § 6-2-38 of the Alabama Code because, in creating a comprehensive statute of limitations scheme, the legislature provided a limitations period for every civil action not expressly excepted by the code. The statute provides that "[a]ll actions for any injury to the person or rights of another not arising from contract and not specifically enumerated in this section must be brought within two years." ALA. CODE § 6-2-38( l) (Supp. 1992). Since no other limitations provision provides for or excepts foreign country judgments, the appellees read "actions for any injury to the person or rights of another not arising from contract" broadly to include actions to enforce judgments. They reason this action does not arise from contract, but rather is an alleged "failure to satisfy an obligation" and, therefore, is an unenumerated action "for injury to the . . . rights of another." In short, they characterize this action as arising from a tort. We do not think such an interpretation would be sound. To suggest that this action is something other than a claim for damages "arising from contract" is frivolous.

For centuries courts have recognized that civil actions either arise from contracts or torts. "A `tort' has been defined broadly as a `civil wrong, other than breach of contract, for which the court will provide a remedy in the form of an action for damages.'" United States v. Burke, ___ U.S. ___, 112 S.Ct. 1867, 119 L.Ed.2d 34 (1992) (quoting W. Page Keeton et al., Prosser and Keeton on the Law of Torts § 1, at 2 (5th ed. 1984)).

Even if we thought this to be a correct interpretation of § 6-2-38( l), in the final analysis our decision would be no different. Application of this statute would result in imposing a two year limitations period to the Greek judgment, while applying a twenty year limit to domestic judgments. Such discriminatory treatment would directly conflict with the treaty provision which mandates foreign country judgments be treated the same as sister state judgments, thus leaving § 6-2-32 as the only relevant provision to apply in Alabama.

CONCLUSION

For the foregoing reasons, we VACATE the judgment of the district court and REMAND for proceedings consistent with this opinion.

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VAGENAS v. CONTINENTAL GIN CO
(Apr 9, 1993)