Filed: Oct. 16, 2014
Latest Update: Mar. 02, 2020
Summary: Case: 13-11339 Date Filed: 10/16/2014 Page: 1 of 67 [PUBLISH] IN THE UNITED STATES COURT OF APPEALS FOR THE ELEVENTH CIRCUIT _ No. 13-11339 _ D.C. Docket No. 8:09-cv-02308-RAL-MAP KEITH STANSELL, MARC GONSALVES, THOMAS HOWES, JUDITH G. JANIS, CHRISTOPHER T. JANIS, GREER C. JANIS, MICHAEL I. JANIS, JONATHAN N. JANIS, Plaintiffs - Appellees, versus REVOLUTIONARY ARMED FORCES OF COLUMBIA, (FARC), et al., Defendants, JOSE RICUARTE DIAZ HERRERA, Claimant - Appellant, WACHOVIA BANK, a Division of Well
Summary: Case: 13-11339 Date Filed: 10/16/2014 Page: 1 of 67 [PUBLISH] IN THE UNITED STATES COURT OF APPEALS FOR THE ELEVENTH CIRCUIT _ No. 13-11339 _ D.C. Docket No. 8:09-cv-02308-RAL-MAP KEITH STANSELL, MARC GONSALVES, THOMAS HOWES, JUDITH G. JANIS, CHRISTOPHER T. JANIS, GREER C. JANIS, MICHAEL I. JANIS, JONATHAN N. JANIS, Plaintiffs - Appellees, versus REVOLUTIONARY ARMED FORCES OF COLUMBIA, (FARC), et al., Defendants, JOSE RICUARTE DIAZ HERRERA, Claimant - Appellant, WACHOVIA BANK, a Division of Wells..
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Case: 13-11339 Date Filed: 10/16/2014 Page: 1 of 67
[PUBLISH]
IN THE UNITED STATES COURT OF APPEALS
FOR THE ELEVENTH CIRCUIT
________________________
No. 13-11339
________________________
D.C. Docket No. 8:09-cv-02308-RAL-MAP
KEITH STANSELL,
MARC GONSALVES,
THOMAS HOWES,
JUDITH G. JANIS,
CHRISTOPHER T. JANIS,
GREER C. JANIS,
MICHAEL I. JANIS,
JONATHAN N. JANIS,
Plaintiffs - Appellees,
versus
REVOLUTIONARY ARMED FORCES OF COLUMBIA,
(FARC), et al.,
Defendants,
JOSE RICUARTE DIAZ HERRERA,
Claimant - Appellant,
WACHOVIA BANK,
a Division of Wells Fargo Bank, N.A., et al.,
Garnishees,
Case: 13-11339 Date Filed: 10/16/2014 Page: 2 of 67
MERCURIO INTERNATIONAL S.A., et al.,
Claimants.
________________________
No. 13-11959
________________________
D.C. Docket No. 8:09-cv-02308-RAL-MAP
KEITH STANSELL,
MARC GONSALVES,
THOMAS HOWES,
JUDITH G. JANIS,
CHRISTOPHER T. JANIS,
MICHAEL I. JANIS,
GREER C. JANIS,
JONATHAN N. JANIS,
Plaintiffs - Appellees,
versus
REVOLUTIONARY ARMED FORCES OF COLUMBIA (FARC), et al.,
Defendants,
CARMEN SIMAN,
ARMANDO JAAR,
RICARDO JAAR,
MOISES SAIEH,
CARLOS SAIEH,
ABDALA SAIEH,
JAQUELINE SAIEH,
2
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U.S. Citizen Beneficial Owner of Brunello Ltd. Trust,
C. W. SALMAN PARTNERS,
SALMAN CORAL WAY PARTNERS,
CONFECCIONES LORD S.A.,
ALM INVESTMENT FLORIDA, INC.,
VILLAROSA INVESTMENTS FLORIDA, INC.,
KAREN OVERSEAS, INC.,
MLA INVESTMENTS, INC.,
JACARIA FLORIDA, INC.,
SUNSET & 97TH HOLDINGS, LLC,
MARIAM SUTHERLIN,
JAMCE INVESTMENTS, LTD.,
AMELIA SAIEH,
Claimants - Appellants,
KATHYA SAIEH,
JAIME SAIEH,
LAURA SAIEH,
SANDRA SAIEH,
KAREN SAIEH,
GRANADA ASSOCIATES, INC.,
Defendants - Appellants.
________________________
No. 13-12019
________________________
D.C. Docket No. 8:09-cv-02308-RAL-MAP
KEITH STANSELL,
MARC GONSALVES,
THOMAS HOWES,
JUDITH G. JANIS,
3
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CHRISTOPHER T. JANIS, et al.,
Plaintiffs - Appellees,
versus
REVOLUNTIONARY ARMED FORCES OF COLOMBIA (FARC), et al.,
Defendants,
PLAINVIEW FLORIDA II, INC.,
C. W. SALMAN PARTNERS,
SALMAN CORAL WAY PARTNERS,
Claimants - Appellants.
________________________
No. 13-12116
________________________
D.C. Docket No. 8:09-cv-02308-RAL-MAP
KEITH STANSELL,
MARC GONSALVES,
THOMAS HOWES,
JUDITH G. JANIS,
CHRISTOPHER T. JANIS, et al.,
Plaintiffs - Appellees,
versus
REVOLUTIONARY ARMED FORCES OF COLOMBIA,
(FARC), et al.,
Defendants,
4
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CARMEN SIMAN,
ARMANDO JAAR,
MOISES SAIEH,
CARLOS SAIEH,
Claimants - Appellants.
________________________
No. 13-12171
________________________
D.C. Docket No. 8:09-cv-02308-RAL-MAP
KEITH STANSELL,
MARC GONSALVES,
THOMAS HOWES,
JUDITH G. JANIS,
CHRISTOPHER T. JANIS,
GREER C. JANIS,
MICHAEL I. JANIS,
JONATHAN JANIS,
Plaintiffs - Appellees,
versus
REVOLUTIONARY ARMED FORCES OF COLUMBIA (FARC), et al.,
Defendants,
KATHYA SAIEH,
LAURA SAIEH,
SANDRA SAIEH,
KAREN SAIEH,
5
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Defendants - Appellants,
CARLOS SAIEH,
BRUNELLO, LTD.,
JACQUELINE SAIEH,
U.S. Citizen Beneficial Owner of Brunello Ltd. Trust,
Claimants - Appellants.
________________________
No. 13-12337
________________________
D.C. Docket No. 8:09-cv-02308-RAL-MAP
KEITH STANSELL,
MARC GONSALVES,
THOMAS HOWES,
JUDITH G. JANIS,
CHRISTOPHER T. JANIS,
GREER C. JANIS,
MICHAEL I. JANIS,
JONATHAN N. JANIS,
Plaintiffs - Appellees,
versus
REVOLUTIONARY ARMED FORCES OF COLOMBIA (FARC), et al.,
Defendants,
LUIS SUTHERLIN,
Claimant - Appellant.
6
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________________________
Appeals from the United States District Court
for the Middle District of Florida
________________________
(October 16, 2014)
Before WILSON, JORDAN and BLACK, Circuit Judges.
WILSON, Circuit Judge:
These appeals arise from the collection efforts of victims of a terrorist
kidnapping in Colombia. After obtaining a nine-figure default judgment against
their captor, they attempted to collect through a series of ex parte garnishments and
executions against third parties with purported illicit ties to the captor. The third-
party claimants challenge the judgments against their property on both substantive
and procedural grounds, including alleged due process violations arising from the
ex parte manner in which the district court initially handled the proceedings. We
affirm the district court as to all appeals but one: No. 13-12171, concerning
Brunello Ltd.
I. Global Discussion
Because common themes run through all appeals, we initially discuss the
underlying facts and common issues globally. Later, we will apply our
conclusions to the particular circumstances of each appeal and analyze the unique
issues in a more individualized manner for each third-party claimant.
7
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A. Underlying Procedural and Factual Background
On February 13, 2003, Keith Stansell, Marc Gonsalves, Thomas Howes,
and Thomas Janis were flying over Colombia while performing counter-narcotics
reconnaissance. Members of the Revolutionary Armed Forces of Colombia
(FARC) shot their plane down and, after the plane’s crash landing, captured the
group. FARC immediately executed Janis and took the survivors hostage, holding
them for over five years. After they were rescued and returned to the United
States, Stansell, Gonsalves, and Howes—along with Janis’s wife, Judith G. Janis,
as personal representative of his estate, and his surviving children, Christopher T.
Janis, Greer C. Janis, Michael I. Janis, and Jonathan N. Janis—(collectively,
Plaintiffs) filed a complaint against FARC in the United States District Court for
the Middle District of Florida under the Antiterrorism Act, 18 U.S.C. § 2333,
naming FARC and a number of associated individuals as defendants. After court-
directed service of summons by publication, FARC failed to appear, and the
district court entered a default judgment in favor of Plaintiffs in the amount of
$318,030,000 on June 15, 2010.
Because of the difficulty inherent in the direct execution of a judgment
against a terrorist organization, Plaintiffs sought to satisfy their award by seizing
the assets of “agenc[ies] or instrumentalit[ies]” of FARC pursuant to Section
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201(a) of the Terrorism Risk Insurance Act of 2002, Pub. L. No. 107-297, §
201(a), 116 Stat. 2322, 2337 (TRIA), 1 which reads:
Notwithstanding any other provision of law, and except as provided in
subsection (b), in every case in which a person has obtained a
judgment against a terrorist party on a claim based upon an act of
terrorism, or for which a terrorist party is not immune under section
1605(a)(7) of title 28, United States Code, the blocked assets of that
terrorist party (including the blocked assets of any agency or
instrumentality of that terrorist party) shall be subject to execution or
attachment in aid of execution in order to satisfy such judgment to the
extent of any compensatory damages for which such terrorist party
has been adjudged liable.
TRIA § 201(a). The elements a party is required to establish before executing
under TRIA § 201 are therefore quite straightforward. The party must first
establish that she has obtained a judgment against a terrorist party that is either for
a claim based on an act of terrorism or for a claim for which a terrorist party is not
immune. Weininger v. Castro, 462 F. Supp. 2d 457, 479 (S.D.N.Y. 2006). The
party must then show that the assets are blocked as that term is defined in TRIA.
Id. Finally, the total amount of the execution cannot exceed the amount of
compensatory damages.
Id. If the party wishes to execute against the assets of a
terrorist party’s agency or instrumentality, the party must further establish that the
purported agency or instrumentality is actually an agency or instrumentality. Of
1
This provision is codified as a note to 28 U.S.C. § 1610. For ease of reference and
familiarity, we will cite to TRIA § 201, with accompanying subsections where appropriate.
9
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the preceding elements, only the blocked asset and agency or instrumentality
determinations are at issue in any of the appeals here.
TRIA defines “blocked assets” as “any asset seized or frozen by the United
States under section 5(b) of the Trading With the Enemy Act [(TWEA)] or under
sections 202 and 203 of the International Emergency Economic Powers Act
[(IEEPA)].” TRIA § 201(d)(2)(A) (citation omitted). Assets are blocked when the
United States Department of the Treasury Office of Foreign Assets Control
(OFAC) designates the owner of the assets as a Specially Designated Narcotics
Trafficker (SDNT). See 31 C.F.R. §§ 594.201, 594.301, 597.201, 597.303.
OFAC’s blocking power is authorized by TWEA, 12 U.S.C. § 95a, 50 App. U.S.C.
§§ 1–14, 16–39, 40–44, and the IEEPA, 50 U.S.C. §§ 1701–1706, the blocking
authority of which TRIA § 201 includes in its definition of blocked assets.2 OFAC
also has blocking authority under other legislation not mentioned in TRIA § 201,
including the Foreign Narcotics Kingpin Designation Act, 21 U.S.C. §§ 1901–08
(Kingpin Act). OFAC specifies the jurisdictional basis for any designation it
makes, i.e. the statute under which an individual or entity is designated. Thus, the
2
Designees under the IEEPA include those found by OFAC
[t]o play a significant role in international narcotics trafficking centered in
Colombia; . . . [m]aterially to assist in, or provide financial or technological
support for or goods or services in support of, the narcotics trafficking activities
of [SDNTs]; [or] to be owned or controlled by, or to act for or on behalf of, any
other [SDNT].
31 C.F.R. § 536.312(b) and (c).
10
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blocking of assets by OFAC does not necessarily bring those assets within the
ambit of TRIA execution. See Stansell v. Revolutionary Armed Forces of Colom.
(Mercurio), 704 F.3d 910, 915–17 (11th Cir. 2013) (per curiam) (reversing an
order permitting TRIA execution of assets that OFAC had blocked pursuant to the
Kingpin Act).3 All the individuals and entities party to these appeals (Claimants) 4
whose property is in jeopardy due to Plaintiffs’ TRIA execution had been
designated SDNTs by OFAC, rendering their assets blocked. Other than Herrera,
no party disputes that the assets in question were blocked at some point for
purposes of TRIA execution, though some argue that their eventual de-listing
during the pendency of the proceedings should have been given effect.
TRIA itself does not define the term “agency or instrumentality.” However,
§ 201 is codified as a note to the Foreign Sovereign Immunities Act, 28 U.S.C. §§
1330, 1602–11 (FSIA). See 28 U.S.C. § 1610 (note). The FSIA defines the term:
An “agency or instrumentality of a foreign state” means 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
For the sake of clarity, we will cite this opinion hereinafter as Mercurio, 704 F.3d 910.
4
As an additional tool for clarity, we will use “Claimants” when referring to all claimant-
appellants collectively and “appellant(s)” when referring to a subset of them.
11
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(3) which is neither a citizen of a State of the United States as defined
in section 1332(c) and (e) of this title, 5 nor created under the laws of
any third country.
Id. § 1603(b). Claimants here disagree with the district court’s standard as well as
its factual determinations regarding the agency or instrumentality status of each.
Plaintiffs initiated their collection efforts in each instance ex parte, without
any direct notice to Claimants. The district court found that, for purposes of TRIA
execution, each Claimant was an agency or instrumentality 6 of FARC and that
each asset was blocked. Importantly, each Claimant eventually discovered the
proceedings against their property. In each case, the district court sided with
Plaintiffs and allowed the collection efforts to proceed (or, where such efforts had
been completed, to lie).
5
Those subsections define the citizenship of corporations and legal representatives of
estates, infants, or incompetents.
6
The district court defined an agency or instrumentality as
Any SDNT . . . , including all of its individual members, divisions and networks,
that is or was ever involved in the cultivation, manufacture, processing, purchase,
sale, trafficking, security, storage, shipment or transportation, distribution of
FARC coca paste or cocaine, or that assisted the FARC’s financial or money
laundering network, . . . because it was either:
(1) materially assisting in, or providing financial or technological support for or
to, or providing goods or services in support of, the international narcotics
trafficking activities of . . . [FARC]; and/or
(2) owned, controlled, or directed by, or acting for or on behalf of, . . . [FARC];
and/or
(3) playing a significant role in international narcotics trafficking [related to coca
paste or cocaine manufactured or supplied by the FARC].
12
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Claimants appealed the various orders granting Plaintiffs’ motions seeking
to collect on their judgment using Claimants’ assets and denying the motions filed
by Claimants seeking relief. They argue separately a number of issues on appeal,
including many that Claimants share in common with one another: (1) that they
were denied constitutional and statutory rights to notice and a hearing because they
were not served with the writs of garnishment and execution or the motions
requesting them; (2) that they were erroneously designated agencies or
instrumentalities of FARC by the district court; (3) that their assets were not
reachable under TRIA § 201 because they have been removed from OFAC’s list of
SDNTs; (4) that Plaintiffs did not obtain the licenses required to execute against
OFAC-blocked assets; (5) that the judgments must be set aside for fraud; and (6)
that on remand, we should assign a different judge to the proceedings.
B. Analysis of the Issues
We now turn to an analysis of the common issues argued on appeal.
1. Constitutional and Statutory Due Process
Claimants contend that they were denied their rights to notice of the
execution proceedings and an opportunity to be heard in violation of the Fifth
Amendment, Florida law, and the FSIA. Whether a due process violation occurred
is reviewed de novo. Ali v. U.S. Att’y Gen., 443 F.3d 804, 808 (11th Cir. 2006)
(per curiam). The de novo standard also applies when determining whether
13
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constitutional protections extend to foreign nationals. United States v. Emmanuel,
565 F.3d 1324, 1330–32 (11th Cir. 2009) (reviewing de novo whether the Fourth
Amendment applied to a foreign search of a foreign national).
Florida law has specific requirements for notice and an opportunity to be
heard. See Fla. Stat. § 56.21 (“When levying upon real property, notice of such
levy and execution sale and affidavit . . . shall be made to the property owner of
record in the same manner as notice is made to any judgment debtor pursuant to
this section . . . .”); Fla. Stat. § 56.16 (outlining procedure for third-party claimants
to halt an execution sale); Fla. Stat. § 77.055 (requiring service of garnishee’s
answer to the writ on “any . . . person disclosed in the garnishee’s answer to have
any ownership interest in the” asset); Fla. Stat. § 77.07(2) (permitting “any other
person having an ownership interest in [garnished] property” to move to dissolve
the writ with a motion “stating that any allegation in plaintiff’s motion for writ is
untrue”). In a nutshell, Florida law provides certain protections to third parties
claiming an interest in property subject to garnishment or execution. Such law is
effective in proceedings in federal court, unless, as the district court held here, it is
preempted by federal statute. Fed. R. Civ. P. 69(a)(1). We review de novo a
district court’s determination that federal law preempts state law. Pace v. CSX
Transp., Inc., 613 F.3d 1066, 1068 (11th Cir. 2010).
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The FSIA also contains a notice requirement. 28 U.S.C. § 1610(c)
(requiring notice required under § 1608(e) be provided where property is attached
under § 1610(a) or (b)). Whether this notice requirement applies to TRIA
execution is a question of law we review de novo. Mercurio, 704 F.3d at 914.
a. Constitutional Due Process
Preliminarily, we address whether, under the Fifth Amendment, Claimants
were entitled to due process. The district court and Plaintiffs have at some points
maintained that some were not so entitled due to their status as foreign nationals.
Where a district court exercises its jurisdiction over property within the United
States, however, the owners of that property have due process rights regardless of
their location or nationality. See Russian Volunteer Fleet v. United States, 282
U.S. 481, 491–92,
51 S. Ct. 229, 232 (1931) (applying the Takings Clause to
confiscation of foreign-owned property located within the United States);
Helicopteros Nacionales de Colom., S.A. v. Hall,
466 U.S. 408, 413–19,
104 S. Ct.
1868, 1872–74 (1984) (applying due process protection to a Colombian
corporation); 7 Schiffahartsgesellschaft Leonhardt & Co. v. A. Bottacchi S.A. de
Navegacion,
732 F.2d 1543, 1545–49 (11th Cir. 1984) (analyzing due process
protections vis-à-vis a foreign entity whose property came under the court’s
7
Helicopteros dealt with due process protections afforded by the Fourteenth Amendment.
466 U.S. at 413, 104 S. Ct. at 1872. However, Fourteenth Amendment due process cases are
informative for Fifth Amendment due process inquiries. Republic of Panama v. BCCI Holdings
(Luxembourg) S.A.,
119 F.3d 935, 944 (11th Cir. 1997).
15
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jurisdiction); Nat’l Council of Resistance of Iran v. Dep’t of State, 251 F.3d 192,
204 (D.C. Cir. 2001) (“Russian Volunteer Fleet makes clear that a foreign
organization that acquires or holds property in this country may invoke the
protections of the Constitution when that property is placed in jeopardy by
government intervention.” (citation omitted)). Therefore, Claimants were entitled
to the Fifth Amendment’s guarantee of due process.
Now, we consider what due process requires. As Plaintiffs point out in their
briefs, post-judgment motions and writs typically need not be served on
defendants, including when collection is pursued under the FSIA. See Peterson v.
Islamic Republic of Iran, 627 F.3d 1117, 1130 (9th Cir. 2010). Courts have held
that this principle extends to agencies or instrumentalities of terrorist judgment
debtors under the FSIA. See, e.g., Estate of Heiser v. Islamic Republic of Iran,
807
F. Supp. 2d 9, 23 (D.D.C. 2011) (“Congress did not intent [sic] to require service
of garnishment writs on agencies or instrumentalities of foreign states responsible
for acts of state-sponsored terrorism . . . .”). To the extent Estate of Heiser holds
that alleged agencies or instrumentalities which dispute that classification are not
entitled to notice of execution or garnishment proceedings against their assets, we
disagree.
TRIA execution requires two separate determinations regarding the property
being executed: (i) that the asset is blocked, and (ii) that the owner of the asset is
16
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an agency or instrumentality of the judgment debtor. TRIA § 201(a). While the
first can be definitively established by the fact that OFAC has taken action against
the alleged agency or instrumentality under TWEA or the IEEPA, the second is a
separate determination in addition to blockage not dispositively decided by OFAC
designation. Furthermore, because an agency or instrumentality determination
carries drastic results—the attachment and execution of property—it undeniably
implicates due process concerns. United States v. Bissell, 866 F.2d 1343, 1352
(11th Cir. 1989) (“[Due process] is implicated when, as here, persons are deprived
of their possessory interests in property.”). It follows that parties whose assets are
under threat of execution pursuant to TRIA § 201 are entitled to notice and an
opportunity to be heard in order to rebut the allegations and preserve their
possessory interest in blocked assets. See Dusenbery v. United States,
534 U.S.
161, 167,
122 S. Ct. 694, 699 (2002) (“[I]ndividuals whose property interests are at
stake are entitled to notice and an opportunity to be heard.” (internal quotation
marks omitted)).
Plaintiffs respond by emphasizing that this court and others have repeatedly
held that due process does not require service of post-judgment motions.
Typically, however, such motions are directed at the judgment debtor, see Brown
17
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v. Liberty Loan Corp. of Duval, 539 F.2d 1355, 1357 (5th Cir. 1976),8 not at third
parties such as Claimants. The difference—one that the district court did not
appropriately consider—is crucial. Where the owner of the asset being garnished
is the judgment debtor, “notice upon commencement of a suit is adequate to give a
judgment debtor advance warning of later proceedings undertaken to satisfy a
judgment.”
Id. at 1364. That same type of notice is not sufficient where the
claimant is a third party, who cannot be expected to be on notice of the judgment.
It may be argued that agencies or instrumentalities are on constructive notice
because, as agencies or instrumentalities of the judgment debtor—in this case,
FARC—they share a legal identity with the judgment debtor. Cf. 28 U.S.C. §
1603(a) (defining “foreign state” for FSIA purposes to include an agency or
instrumentality of a foreign state). While that reasoning seems rational in a
vacuum, when considered in context, it is circular and illogical. That is, a third
party can only be deemed to be on notice if it is associated with the judgment
debtor, so it cannot be considered to have such notice until the district court makes
the agency or instrumentality determination. Without notice and a fair hearing
where both sides are permitted to present evidence, the third party never has an
opportunity to dispute its classification as an agency or instrumentality. Cf.
8
In Bonner v. City of Prichard, 661 F.2d 1206, 1207 (11th Cir. 1981) (en banc), we
adopted as binding precedent all of the decisions of the former Fifth Circuit handed down prior
to the close of business on September 30, 1981.
18
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Alejandre v. Telefonica Larga Distancia de P.R., Inc., 183 F.3d 1277, 1284 (11th
Cir. 1999) (applying the presumption of separate juridicial status of a state and its
alleged instrumentality under the FSIA). In short, it puts the cart before the horse
to hold that Claimants had notice of the agency or instrumentality proceedings
because they were agencies or instrumentalities of FARC, and such a finding
would thus never be tested in an adversarial process. Any party could be deemed
an agency or instrumentality and thus be deemed to be on constructive notice,
allowing seizure of its assets on a potentially erroneous designation about which it
never even knew and never had the opportunity to challenge. Therefore, due
process entitled Claimants to actual notice of the post-judgment proceedings
against them. We will analyze the adequacy of the notice provided to each
Claimant in Part II.
Further, because Claimants were entitled to the basic constitutional
protection of due process, they were entitled to be heard on their challenge to the
agency or instrumentality issue. The district court eventually held generally that
“some form” of process was due and that Claimants were afforded an adeqaute
opportunity to be heard by (i) the requirement that Plaintiffs file motions in the
district court and seek entry of a court order, (ii) the opportunity to challenge their
respective designations both administratively and judicially, and (iii) the stay
pending the outcome of Mercurio. The first of these cannot constitute the requisite
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opportunity to be heard. Requiring evidence from a party seeking to execute
against a third party’s assets does nothing to give the third party an opportunity to
be heard. Due process contemplates offering a party an opportunity to rebut
charges leveled against it, not allowing that party’s opponent to present evidence
supporting that charge.
The second manner in which Claimants were, according to the district court,
given an opportunity to be heard is also constitutionally deficient. Again, the
agency or instrumentality determination is separate from the determination that an
asset is blocked and carries more immediate and substantial consequences than
does the SDNT designation. Moreover, designation is a unilateral move that takes
place and blocks a SDNT’s assets before the SDNT has an opportunity to
challenge the designation.9 An administrative challenge to OFAC designation
affords a party an opportunity to challenge the decision to block its assets, not to
challenge its status as an agency or instrumentality.
Finally, the third example of Claimants’ opportunity to be heard—the stay—
standing alone, is not sufficient to provide Claimants with due process. However,
9
We disagree with the conclusion that the right to challenge the OFAC designation
provided a sufficient safeguard for Claimants and their property. Some Claimants had
commenced proceedings seeking de-listing when turnover judgments were entered against them.
For those Claimants who eventually succeeded in their challenges, the district court correctly
ruled that de-listing did not apply retroactively, and the de-listed Claimants were unable to attain
relief with respect to those assets already executed. It cannot be that available de-listing
procedures were effective due process bulwarks where a party can be listed, its assets blocked,
and TRIA execution procedures begun—thus rendering future de-listing ineffective—before the
party receives notice of the designation or blockage.
20
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in conjunction with an actual opportunity for Claimants to be heard, it may satisfy
due process. We will examine the circumstances of each appeal below to
determine the extent to which each Claimant had a sufficient opportunity to be
heard.
In addition, due process must not only be adequate; it must be timely.
Goldberg v. Kelly, 397 U.S. 254, 267–68,
90 S. Ct. 1011, 1020 (1970). Here,
Claimants argue that they were denied due process because they were not granted
pre-deprivation hearings—that is, prior to attachment under TRIA. On this point,
we disagree.
We assess whether the procedure afforded to a party is timely considering
the three factors set forth in Mathews v. Eldridge, 424 U.S. 319, 334–35,
96 S. Ct.
893, 903 (1976), as refined by Connecticut v. Doehr 10:
[F]irst, . . . the private interest that will be affected by the prejudgment
measure; second, . . . the risk of erroneous deprivation through the
procedures under attack and the probable value of additional or
alternative safeguards; and third, [we pay] principal attention to the
10
In Doehr, the Supreme Court applied the Mathews analysis to a deprivation initiated by
a private party. See 501 U.S. at 11–16, 111 S. Ct. at 2112–15. Under such circumstances, when
assessing the third prong of the Mathews test, courts must give “principal attention to the interest
of the party seeking the prejudgment remedy, with, nonetheless, due regard for any ancillary
interest the government may have in providing the procedure or forgoing the added burden of
providing greater protections.”
Id. at 11, 111 S. Ct. at 2112. Therefore, we consider the private
party’s interests in the specific attachment as well as the government’s interests affected by
“financial or administrative burdens involving predeprivation hearings.” See
id. at 16, 111 S. Ct.
at 2115. We also assess the government’s “substantive interest in protecting any rights of the
plaintiff[, which] cannot be any more weighty than those rights themselves.”
Id. (emphasis
added). Because we consider the government’s interest “in providing the procedure,” we
properly consider TRIA judgment creditors’ ability to collect generally, not just that of Plaintiffs
here.
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interest of the party seeking the prejudgment remedy, with,
nonetheless, due regard for any ancillary interest the government may
have in providing the procedure or forgoing the added burden of
providing greater protections.
501 U.S. 1, 11,
111 S. Ct. 2105, 2112 (1991). The first factor weighs in
Claimants’ favor. See id. at
11, 111 S. Ct. at 2112–13 (listing the “significant”
consequences of attachment). Although Plaintiffs point out that SDNTs have a
diminished interest in their blocked assets because their ability to alienate that
property is already restricted, SDNTs do retain some interest, especially because
the possibility of unblocking remains, as occurred with a number of Claimants
here. Cf.
Bissell, 866 F.2d at 1352–54 (recognizing the continued interest of a
criminal defendant in frozen property prior to forfeiture). As discussed below, de-
listing does not operate retroactively, so attachment creates an independent
restraint on property that may be effective even where de-listing occurs during the
pendency of garnishment or execution proceedings.11
However, the second and third factors weigh substantially in favor of
immediate attachment. Before a writ of garnishment or execution pursuant to
TRIA § 201 issues, a district court must determine that the property owner is a
SDNT designated under TWEA or the IEEPA and is an agency or instrumentality
of the judgment debtor terrorist party. The district court did that here, after
11
At the same time, it is relevant that the burden accompanying attachment under TRIA
is no more substantial than the already-existing burden of blockage. In other words, attachment
under TRIA is less burdensome than, for example, pre-hearing seizure of an asset.
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Plaintiffs made factual proffers on those issues. The risk of erroneous deprivation
is therefore diminished. The third factor weighs heavily in favor of a later hearing:
ensuring adequate satisfaction of judgments against terrorist parties. During the
pendency of execution proceedings, a number of events may occur which make
satisfaction using a particular asset impossible. Other judgment creditors may seek
to execute against the asset. The government may take action that makes the asset
unreachable, including seizure or de-listing of the alleged agency or
instrumentality (which may or may not be the result of a finding that the SDNT
designation was incorrectly reached), the latter of which would enable the asset
owner to move the asset (or proceeds from its sale) outside the reach of any United
States district court. Cf. Calero-Toledo v. Pearson Yacht Leasing Co., 416 U.S.
663, 679,
94 S. Ct. 2080, 2090 (1974) (“[P]reseizure notice and hearing might
frustrate the interests served by the statutes . . . if advance warning of confiscation
were given.”); Mitchell v. W.T. Grant Co.,
416 U.S. 600, 610,
94 S. Ct. 1895, 1901
(1974) (noting “the risk of destruction or alienation if notice and a prior hearing are
supplied, and the low risk of a wrongful determination of possession” as
considerations supporting the constitutionality of pre-notice seizure of household
goods). Mere attachment is a minimally intrusive manner of reducing these risks,
especially because blocked assets, by definition, already have more substantial
restraints on their alienation. Because the factors weigh in favor of immediate
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attachment, Claimants were not constitutionally entitled to a hearing before the
writ issued. In sum, Claimants were entitled to notice and to be heard before
execution, though not necessarily before attachment.
b. Statutory Entitlements to Notice and Hearing
Now we consider whether Florida procedure governs TRIA execution.
Plaintiffs contend, and the district court held, that TRIA § 201 partially conflicts
with Florida garnishment and execution statutes and that their notice and hearing
provisions therefore do not govern garnishment and execution procedure under
TRIA § 201. Essentially, the district court held that, because TRIA § 201’s
purpose is to facilitate collecting on judgments against terrorist parties, any state
legislation that might hinder collection efforts in any manner—even if their
purpose was to give potentially innocent, third-party claimants the opportunity to
contest execution efforts—conflicted with TRIA § 201. We disagree. Nothing
about the language or purpose of TRIA § 201 indicates that it conflicts with
Florida’s requirements that owners of property being garnished or executed against
are entitled to notice, notwithstanding TRIA’s use of the word “notwithstanding.”
United States v. Holy Land Found. for Relief & Dev., 722 F.3d 677, 687–89 (5th
Cir. 2013) (refusing to give effect to an interpretation of TRIA § 201 that would
read “notwithstanding” to “operate[] to override all statutes that, by their purpose
or effect, shield assets from attachment or execution”); see Altria Grp., Inc. v.
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Good, 555 U.S. 70, 77,
129 S. Ct. 538, 543 (2008) (noting that courts presume that
preemption does not apply).
We cannot say that the state garnishment law in this case is preempted.
Contrary to the district court’s conclusion, Florida law does not shield terrorist
assets from execution. Instead, Florida’s notice requirements simply provide the
procedure for executing against the full range of assets that fall within the ambit of
TRIA § 201. Florida’s statutory notice scheme for garnishment proceedings does
not conflict with TRIA’s “notwithstanding” provision because the assets TRIA
subjects to execution are still subject to execution. Therefore, TRIA § 201 does
not preempt Florida law, and judgment creditors seeking to satisfy judgments
under it must follow the notice requirements of Florida law. See Fed. R. Civ. P.
69(a)(1).
Claimants also assert that, pursuant to the FSIA, specifically 28 U.S.C. §
1610(c), Plaintiffs should have served a copy of the default judgment required by
28 U.S.C. § 1608(e) on Claimants. Here, Claimants are wrong for a number of
reasons. First, § 1610(c) governs “attachment[s] or execution[s] referred to in
subsections (a) and (b) of this section.” The attachments and executions here were
obtained pursuant to TRIA § 201, not 28 U.S.C. § 1610(a) or (b). Second, §
1608(e) deals with default judgments obtained against foreign states and their
political subdivisions and agencies or instrumentalities. FARC is not a foreign
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state, and Claimants are not political subdivisions or agencies or instrumentalities
of one. Therefore, § 1608(e) notice is, by its very plain terms, not required in this
context.
In sum, the district court erred when it held that Florida law did not govern
the garnishment and execution procedures and that the alleged agencies or
instrumentalities were not entitled to due process. Whether and how this affects
the disposition of each appeal is contingent on their respective facts, and we thus
reserve the more particularized analyses for the discussions of each appeal below.
2. Agency or Instrumentality
Claimants’ second primary argument on appeal is that they were erroneously
found to be agencies or instrumentalities of FARC. They object both to the district
court’s chosen standard for identifying agencies or instrumentalities and to the
district court’s ultimate determinations. Turning to the preliminary question,
whether the district court applied the correct standard in reaching the agency or
instrumentality determination is a legal question we review de novo. Mercurio,
704 F.3d at 914.
Claimants argue that, because TRIA does not have its own definition of
“agency or instrumentality” and is codified as a note to 28 U.S.C. § 1610, the
district court should have applied the FSIA definition, 28 U.S.C. § 1603(b), which
applies to § 1610. To apply that definition here, we would have to tweak §
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1603(b)’s definition because it requires that a purported agency or instrumentality
be an organ of, or majority-owned by, “a foreign state or political subdivision
thereof,” 28 U.S.C. § 1603(b)(2), and Claimants are alleged to be agencies or
instrumentalities of a non-state terrorist organization. By suggesting that agencies
or instrumentalities of parties other than foreign states or their political
subdivisions may be subject to TRIA execution, Claimants seem to imply that,
where the statute contains standards that are inapplicable to non-state terrorist
parties, we should simply relax the foreign state requirement. Assuming that such
a re-reading of the statute is appropriate, applying the § 1603(b) standard to TRIA
§ 201 would permit TRIA execution against terrorist parties or parties that are
organs of or majority-owned by a terrorist party, regardless of whether the terrorist
party is a state or non-state actor. See 28 U.S.C. § 1603(b)(2).
We cannot adopt this flexible application of § 1603(b) because it would
create an absurd result and leave TRIA § 201 nearly meaningless. First, because
this would only permit execution against organs, political subdivisions, and
majority-owned organizations, individuals are affirmatively excluded from
execution. Samantar v. Yousuf, 560 U.S. 305, 314–16,
130 S. Ct. 2278, 2286–87
(2010). Section 1603(b)(3) further limits agency or instrumentality findings to
parties “which [are] neither . . . citizen[s] of a State of the United States . . . , nor
created under the laws of any third country.” 28 U.S.C. § 1603(b)(3). Because
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any organization with legal personhood would necessarily be either “a citizen of a
State of the United States . . . [or] created under the laws of any third country,”
none could be an agency or instrumentality under this definition. 12 Therefore,
applying the FSIA’s definition of agencies or instrumentalities to TRIA would
leave only terrorist states as potential sponsors of agencies or instrumentalities
under TRIA § 201, eviscerating TRIA’s effectiveness vis-à-vis non-state terrorist
organizations. This cannot stand, as TRIA’s definition clearly contemplates non-
state judgment debtors being subjected to TRIA execution. See TRIA § 201(d)(4)
(defining “terrorist party” to include both state actors and non-state terrorist
organizations). Accordingly, the district court was correct to apply a different
standard so that Congress’s intent could be carried out. 13 See Hausler v. JP
12
And this is a generous interpretation of the final clause of § 1603(b)(3). The “third
country” element uses as a reference the “foreign state or political subdivision thereof” of which
the party is purported to be an organ or by which it is purported to be owned. Where the agency
or instrumentality’s parent is not a foreign state or its subdivision, the mention of a third country
would be illogical or inapplicable. At best, it could be explained as effectively making every
country a “third country.” Under such an interpretation, all organizations created under the laws
of any country are created under the laws of a third country and thus excluded from the
definition of an agency or instrumentality.
Moreover, the rationale of the third country exception “is that if a foreign state acquires
or establishes a company or other legal entity in a foreign country, such entity is presumptively
engaging in activities that are either commercial or private in nature,” rendering that entity
unprotected by the principle of sovereign immunity for purposes of the FSIA. H.R. Rep. No. 94-
1487, at 15 (1976), reprinted in 1976 U.S.C.C.A.N. 6604, 6614. The flipside is that, when a
foreign state establishes a legal entity under its own laws, it seeks to engage in the “public, non-
commercial activity” which the FSIA protects. This rationale is inapplicable to TRIA § 201,
providing further support for the inapplicability of § 1603(b) to TRIA § 201.
13
At the same time, it is not proper for the district court to rely solely on OFAC
designation as creating an irrebuttable presumption of agency or instrumentality status. The
agency or instrumentality determination is separate from the blocked asset determination. The
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Morgan Chase Bank, N.A., 740 F. Supp. 2d 525, 531 (S.D.N.Y. 2010) (recognizing
that Congress’s purpose in enacting TRIA § 201 was to “‘deal comprehensively
with the problem of enforcement of judgments rendered on behalf of victims of
terrorism’” (quoting H.R. Rep. No. 107-779, at 27 (2002) (Conf. Rep.), reprinted
in 2002 U.S.C.C.A.N. 1430, 1434)).
Making the FSIA’s standard more flexible does not help, either. If either the
Samantar non-individual requirement or the majority-ownership requirement is
applied, TRIA § 201 would still be toothless. Sovereign countries—the parties the
FSIA contemplates—operate with more transparency, and their agencies or
instrumentalities are likelier to be diplomatic organs or state-owned enterprises
with clear ownership structures that makes application of § 1603(b) feasible. See,
e.g., Filler v. Hanvit Bank, 378 F.3d 213, 217 (2d Cir. 2004) (holding that the
Korean Deposit Insurance Corporation was “an organ of a foreign state because [it]
was formed by statute . . . and presidential decree”); S & S Mach. Co v.
Masinexportimport,
706 F.2d 411, 414 (2d Cir. 1983) (identifying “state central
banks and export associations” as the “paradigm of a state agency or
instrumentality”). On the other hand, terrorist organizations such as FARC operate
in the shadows out of necessity. For example, a corporation organized under
district court must therefore provide alleged agencies or instrumentalities an opportunity to
challenge allegations of agency or instrumentality status with their own evidence.
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Florida law will almost certainly not list FARC as a shareholder of record. Instead,
it will operate through layers of affiliated individuals and front companies.
Indeed, the agencies or instrumentalities here were, according to OFAC, part
of FARC’s money laundering operations. These operations result from a need for
clandestine operation, the type § 1603(b) cannot possibly address. Applying §
1603(b) to TRIA § 201 would put the victims of terrorist organizations in the same
place they were prior to TRIA’s enactment: proud owners of multi-million-dollar
judgments with no means of enforcing those judgments. This would counteract
Congress’s purpose in enacting TRIA. See Hausler, 740 F. Supp. 2d at 531.
Because the realities of terrorism make it unrealistic to apply the FSIA
standard to TRIA execution, we think that the district court developed a proper
standard. As the district court noted in its orders finding agency or instrumentality
status, its standard “us[ed] the plain and ordinary meaning of those terms.”
Claimants here give us no reason to believe that any other standard is preferable or
proper.
In addition to attacking the standard applied by the district court, Claimants
challenge the district court’s factual determinations regarding agency or
instrumentality status. Because these challenges present fact-specific questions,
we leave this discussion to the individualized analyses, where we will review the
district court’s determinations for clear error. United States v. Perkins, 348 F.3d
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965, 969 (11th Cir. 2003) (“We assess the district court’s findings of fact under the
clearly erroneous standard . . . .”).
3. Effect of OFAC De-listing.
Claimants argue that their OFAC de-listing should operate retroactively to
put their assets out of Plaintiffs’ reach because they are no longer blocked for
purposes of TRIA § 201. Plaintiffs respond that, once the writ of garnishment is
served on the garnishee and their lien attaches, subsequent de-listing has no effect.
OFAC’s regulations clearly set out the result in such a situation:
Any amendment, modification, or revocation . . . of any order,
regulation, ruling, instruction, or license issued by . . . [OFAC] shall
not, unless otherwise specifically provided, be deemed to affect . . .
any civil or criminal suit or proceeding commenced or pending prior
to such amendment, modification, or revocation. All penalties,
forfeitures, and liabilities under any such order, regulation, ruling,
instruction, or license shall continue and may be enforced as if such
amendment, modification, or revocation had not been made.
31 C.F.R. § 536.402 (emphasis added). Claimants contend that the district court
incorrectly interpreted this regulation to prevent giving retroactive effect to OFAC
de-listing. We review a district court’s interpretation of a regulation de novo.
Owner-Operator Indep. Drivers Ass’n v. Landstar Sys., Inc., 622 F.3d 1307, 1320
(11th Cir. 2010).
Pursuant to the clear terms of the OFAC regulation, if Plaintiffs commenced
their garnishment proceedings prior to revocation of the OFAC order listing them
as SDNTs, then the order of revocation “shall not . . . be deemed to affect” the
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garnishment proceedings. 31 C.F.R. § 536.402. The question is, then, when
proceedings commenced relative to Claimants’ de-listing. Because Federal Rule of
Civil Procedure 69(a)(1) commands that state civil procedure governs execution
proceedings, Florida law governs this issue. In Florida, execution and garnishment
proceedings are ancillary proceedings. See Burdine’s, Inc. v. Drennon, 97 So. 2d
259, 260 (Fla. 1957); Williams Mgmt. Enters., Inc. v. Buonauro,
489 So. 2d 160,
167–68 (Fla. Dist. Ct. App. 1986). Thus, an execution or garnishment proceeding
“commence[s] when the writ is issued or the pleading setting forth the claim of the
party initiating the action is filed.” Fla. R. Civ. P. 1.050. Therefore, a civil
proceeding commenced no later than service of the writ on the garnishee in each
case. Under § 536.402, any OFAC de-listing after that moment was ineffectual for
determining whether the asset was blocked for TRIA § 201 purposes.
Precedent cited by Claimants seemingly holding that de-listing operates
retroactively does not support that proposition. Claimants’ cherry-picked language
from Ministry of Defense and Support for the Armed Forces of the Islamic
Republic of Iran v. Elahi appears to indicate that the assets must be blocked at the
time judgment against the asset is finalized. See 556 U.S. 366, 369, 377–79,
129
S. Ct. 1732, 1735, 1739–40 (2009) (“We ultimately hold that the Cubic Judgment
was not a ‘blocked asset’ at the time the Court of Appeals handed down its
decision . . . .”). The controlling determination in that case, though, was that the
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asset in question was never blocked because Iran’s interest in it arose after the
Treasury Department unblocked all Iranian assets. Id. at 376, 129 S. Ct. at 1739.
In Holy Land Foundation, the assets were unreachable because they were
unblocked during the pendency of the original civil suit, prior to the
commencement of any execution
proceeding. 722 F.3d at 687 (holding that the
government’s restraining order against a blocked asset obtained prior to the entry
of a civil judgment unblocked it for TRIA purposes).
This rule is not just prescribed by law; it is also good policy. Applying de-
listing to the “blocked asset” element of an ongoing TRIA execution proceeding
would undermine the finality of a judgment until direct review of the judgment
concludes. Further, such a policy would provide an incentive to SDNTs to draw
out and delay execution proceedings while their OFAC administrative challenges
were pending. Such a tactic counters the policy of satisfying judgments, especially
where OFAC de-listing is not necessarily an exoneration.
4. OFAC Licenses
Claimants also argue that the execution violated OFAC regulations which
purportedly require a party executing or attaching blocked assets to obtain a license
from OFAC. See 31 C.F.R. § 598.205(a) and (e). This section, however, applies
only where a party is designated pursuant to the Kingpin Act and the Foreign
Narcotics Kingpin Sanctions Regulations, 31 C.F.R. § 598.314(b) (Kingpin
33
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Regulations). See 31 C.F.R. § 598.205 (listing the Kingpin Act as authority for the
regulation requiring licensure). The only party designated under the Kingpin Act
and its accompanying regulations was Herrera; therefore, this argument is
inapplicable to the other parties. 14
5. Fraud
Claimants argue that the means by which Plaintiffs moved against their
assets constituted fraud, creating grounds for setting aside the judgments under
Federal Rule of Civil Procedure 60(b)(3). We review a district court’s denial of a
Rule 60(b)(3) motion for abuse of discretion. Cox Nuclear Pharmacy, Inc. v. CTI,
Inc., 478 F.3d 1303, 1314 (11th Cir. 2007). The movant must establish fraud by
clear and convincing evidence.
Id. Claimants here take issue with Plaintiffs’
deliberate failure to formally serve them with process, purportedly dubious legal
arguments and factual allegations, and failure to disclose adverse law.
However, none of the complained-of acts or omissions provide clear and
convincing evidence of fraud. The failure to serve was based on the good-faith but
erroneous belief that it was not required, which was based on cases instructing that
post-judgment motions need not be served. See, e.g., Peterson, 627 F.3d at 1130.
Even where Plaintiffs’ legal arguments later turned out to be incorrect, we have no
reason to doubt that they were made in good faith. That TRIA § 201 did not allow
14
As discussed below, the licensing requirement does not affect the outcome of Herrera’s
appeal.
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execution against assets blocked under the Kingpin Act was not raised by any party
until the Department of Justice intervened as amicus in the Mercurio appeal,
indicating a lack of bad faith in pursuing Herrera’s assets. The allegedly
fraudulent factual allegations were not misrepresentations, even if they were based
on scant evidence, and the failure to disclose that some parties had begun the
process of challenging their designation was not fraudulent. Finally, Claimants do
not identify the adverse law Plaintiffs failed to disclose. Because Claimants do not
identify facts amounting to fraud, we affirm the district court’s denial of the
60(b)(3) motions.15
6. Reassignment
Finally, Claimants request reassignment to a new district court judge on
remand. We consider three factors when a party requests reassignment: “(1)
whether the original judge would have difficulty putting his previous views and
findings aside; (2) whether reassignment is appropriate to preserve the appearance
of justice; (3) whether reassignment would entail waste and duplication out of
proportion to gains realized from reassignment.” United States v. Torkington, 874
F.2d 1441, 1447 (11th Cir. 1989) (per curiam). Only Brunello faces a remand, but
15
Because Plaintiffs and their counsel acted in good faith throughout the proceedings, the
appellant’s motion for sanctions pursuant to 28 U.S.C. § 1927 in Appeal No. 13-11339 is denied.
See Amlong & Amlong, P.A. v. Denny’s, Inc., 500 F.3d 1230, 1239 (11th Cir. 2006) (“We have
consistently held that an attorney multiplies proceedings unreasonably and vexatiously within the
meaning of the statute only when the attorney’s conduct is so egregious that it is tantamount to
bad faith.” (internal quotation marks omitted)).
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as we discuss below, our remand includes specific instructions that give the district
court little discretion. Moreover, we are confident that Judge Lazzara will be fair
and just. Therefore, reassignment is unnecessary.
III. Individualized Discussion
We now turn to a discussion of the facts of the individual appeals and apply
our generalized conclusions to the circumstances of each appeal. Where an appeal
raises a unique argument, we analyze that argument to decide whether it is grounds
for reversing the district court.
A. No. 13-11339 (Herrera)
OFAC designated Jose Ricuarte Diaz Herrera as a SDNT on May 13, 2010,
75 Fed. Reg. 27,118, for allegedly assisting in FARC’s financial fronts network,
thereby blocking his assets. 16 Herrera attempted to use an electronic funds transfer
16
Herrera was designated under the Kingpin Act and the Kingpin Regulations. The
Kingpin Act permits designation of foreign persons
materially assisting in, or providing financial or technological support for or to, or
providing goods or services in support of, the international narcotics trafficking
activities of a significant foreign narcotics trafficker . . . ; . . . owned, controlled,
or directed by, or acting for or on behalf of, a significant foreign narcotics
trafficker . . . ; . . . [or] playing a significant role in international narcotics
trafficking.
21 U.S.C. § 1904(b)(2)–(4); see also 31 C.F.R. § 598.314(b). OFAC did not specify on which of
these grounds it based its decision to designate Herrera. Although TRIA § 201(d)(2)(A) does not
expressly list assets blocked pursuant to the Kingpin Act among those assets subject to execution
or attachment pursuant to TRIA § 201, the district court held that those assets were in fact
subject to execution or attachment because “[t]he Kingpin Act . . . was enacted pursuant to
Congressional findings and authority arising from the [IEEPA].” We later held that execution or
attachment under TRIA § 201 does not include those assets blocked under the Kingpin Act and is
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(EFT) to transfer some of his own money from a Colombian brokerage firm
account into a deposit account in his name at a Colombian bank in June of 2010.
Wachovia, N.A., acting as an intermediary in the EFT, halted the transfer no later
than September 8, 2010, and notified OFAC, as it must under 31 C.F.R. § 501.603.
Herrera subsequently began the process for de-listing as a SDNT by filing a
petition with the OFAC office in Bogota, Colombia, as provided in 31 C.F.R. §
501.807. That petition was granted when OFAC removed Herrera’s SDNT
designation and unblocked his assets effective April 30, 2013. 78 Fed. Reg.
28,700-01 (May 15, 2013).
On December 15, 2010, Plaintiffs moved for a writ of garnishment against
the blocked Wachovia funds. The district court granted the motion on December
16, holding that (1) Herrera was an agency or instrumentality of FARC; (2) funds
blocked under the Kingpin Act were subject to garnishment under TRIA § 201; (3)
Plaintiffs did not need a license from OFAC to garnish the funds; (4) the blocked
funds were property within the United States; and (5) Herrera was not entitled to
notice or a hearing. After the writ was served on Wachovia, Wachovia filed an
answer to the writ on January 11, 2011, wherein it objected to the writ’s issuance
based on their assertion that Federal Rule of Civil Procedure 19 may have required
limited to those assets which were blocked under the acts expressly listed in TRIA §
201(d)(2)(A): TWEA and the IEEPA. Mercurio, 704 F.3d at 917. Herrera bases his appeal
partly on the district court’s erroneous order, which we discuss below.
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the joinder of other parties and other beneficiaries, including Herrera. The district
court entered judgment against Wachovia on January 18, 2011, reaffirming that
Herrera was not entitled to notice or a hearing. No notice of these proceedings was
served on Herrera.
Herrera’s attorney in New York learned of the garnishment proceedings no
later than January 26, 2011, eight days after the district court’s entry of judgment;
the attorney was advised by counsel representing Wachovia to “take up his
grievances with Judge Lazzara.” Herrera and his attorney failed to take any action
until Herrera hired a Florida attorney on February 24, 2011. According to Herrera,
before the attorney could accept fees for his representation in any matter related to
the OFAC designation, he had to apply for and be issued a license from OFAC,
which he obtained on May 12, 2011. Herrera still waited to file anything in the
district court to address the garnishment proceedings until October 31, 2011, when
he filed (1) a motion for relief from the judgment entered on January 18 pursuant
to Federal Rules of Civil Procedure 12(b)(5), 55(c), and 60(b), as well as the Fifth
Amendment; (2) a motion for relief from the writ of garnishment pursuant to
Federal Rule of Civil Procedure 69(a)(1) and Florida garnishment law as well as
the Fifth Amendment; and (3) a motion to disqualify Judge Lazzara pursuant to 28
U.S.C. § 455(a) and (b) as well as the Fifth Amendment. The district court denied
the motion to disqualify on December 5, 2011, and stayed the remainder of the
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motions pending the outcome of Mercurio. After we released that opinion, the
district denied the remaining motions, holding that laches barred consideration of
them and that our opinion in Mercurio could not apply retroactively. Herrera
appeals from that order.
Typically, a turnover judgment is the final, appealable judgment in
garnishment proceedings. Here, the district court entered that turnover judgment
on January 18, 2011. Federal Rule of Appellate Procedure 4(a) requires parties to
file any notice of appeal within thirty days after judgment is entered. Herrera did
not file anything with the district court until October 31, 2011, more than nine
months after the entry of judgment, when he filed motions seeking various types of
relief. The district court denied the consolidated motion on February 26, 2013.
Herrera timely filed a notice of appeal from that order. The order was final and
appealable. See Mirage Resorts, Inc. v. Quiet Nacelle Corp., 206 F.3d 1398, 1401
(11th Cir. 2000); Am. Bankers Ins. Co. of Fla. v. Nw. Nat’l Ins. Co.,
198 F.3d
1332, 1338 (11th Cir. 1999).
Nonetheless, the orders denied motions to set aside the judgment, so we
must consider “only the propriety of the denial or grant of relief and . . . not . . .
issues in the underlying judgment.” Id. Denials of Rule 60(b) and 55(c) motions
are generally subject to an abuse of discretion standard of review. In re Worldwide
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Web Sys., Inc., 328 F.3d 1291, 1295 (11th Cir. 2003); EEOC v. Mike Smith Pontiac
GMC, Inc.,
896 F.2d 524, 528 (11th Cir. 1990).
However, motions to set aside for voidness under Rule 60(b)(4) are subject
to de novo review. Burke v. Smith, 252 F.3d 1260, 1263 (11th Cir. 2001). We
hold that the district court did not abuse its discretion or err in denying the
motions.
A judgment can be set aside for voidness where the court lacked jurisdiction
or where the movant was denied due process. United Student Aid Funds, Inc. v.
Espinosa, 559 U.S. 260, 271,
130 S. Ct. 1367, 1377 (2010). This includes lack of
personal jurisdiction and defective due process for failure to effect proper service.
Worldwide
Web, 328 F.3d at 1299. Herrera is correct to point out that a motion to
set aside a judgment for voidness pursuant to Federal Rule of Civil Procedure
60(b)(4) is not subject to a typical laches analysis. Hertz Corp. v. Alamo Rent-a-
Car, Inc.,
16 F.3d 1126, 1130 (11th Cir. 1994). “However, there are limitations on
this doctrine [that jurisdictional defects are grounds for granting a 60(b)(4)
motion] . . . [including] that objections to personal jurisdiction (unlike subject
matter jurisdiction) are generally waivable.” Worldwide
Web, 328 F.3d at 1299.
Because Herrera knowingly sat on his rights for nine months before filing anything
at all with the district court, he waived his right to object to any defects in the
service of process or to any denial of his right to be heard. See Espinosa,
559 U.S.
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at
275, 130 S. Ct. at 1380 (“Rule 60(b)(4) does not provide a license for litigants to
sleep on their rights.”).
Herrera claims that the delay was out of his control because his attorney was
required to obtain a license before he could be paid using the blocked funds.
Assuming this excuses his delay, 17 Herrera still fails to provide us with grounds for
considering the motion because he waited an additional five months after his
attorney was licensed to file anything with the district court. Herrera does not give
an acceptable reason for this delay. Therefore, the district court did not err in
denying the Rule 60(b)(4) motion.
The additional grounds for voidness Herrera argues apply here are meritless.
The district court had subject matter jurisdiction. It is well settled that a judgment
is not void “simply because it is or may have been erroneous.” Espinosa, 559 U.S.
at 270, 130 S. Ct. at 1377 (internal quotation marks omitted); see also Oakes v.
Horizon Fin., S.A.,
259 F.3d 1315, 1319 (11th Cir. 2001) (“[I]t is well-settled that a
mere error in the exercise of jurisdiction does not support relief under Rule
60(b)(4).”).
17
And we merely assume this for purposes of this analysis. It is not difficult to imagine
that Herrera would be able to find an attorney who would file a notice of appeal before the
deadline, a Federal Rule of Appellate Procedure 4(a)(6) request for reopening the time to file an
appeal, or a Rule 60(b) motion immediately upon learning of the judgment against Herrera at
least to keep Herrera’s opportunity to seek redress from spoiling while the license application
was pending.
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Plaintiffs’ contention that assets blocked under the Kingpin Act are subject
to TRIA execution is not a claim that the district court lacked jurisdiction. The
district court had entered judgment on the writ before we issued Mercurio, so the
mere fact that we later decided that TRIA § 201 does not apply to assets blocked
under the Kingpin Act means the district court’s judgment may have been
erroneous, but it does not mean the court lacked subject matter jurisdiction.
Therefore, the district court had subject matter jurisdiction, and a motion to set
aside the judgment for voidness does not lie based on lack of subject matter
jurisdiction.
Herrera’s argument that the judgment was void because Plaintiffs failed to
obtain licenses from OFAC is likewise unavailing. Voidness for purposes of a
60(b)(4) motion contemplates lack of jurisdiction or defects in due process that
deprive a party of notice or an opportunity to be heard. Espinosa, 559 U.S. at 271,
130 S. Ct. at 1377. It is not sufficient to cite a regulation that makes use of the
word “void,” see 31 C.F.R. § 598.205(a) and (e), and Herrera does not provide
additional argument for why execution of OFAC-blocked assets without a license
constitutes a “fundamental infirmity.” See
Espinosa, 559 U.S. at 270, 130 S. Ct. at
1377.
Motions filed pursuant to Rule 60(b)(6) and 60(b)(3) are not subject to the
very generous timing considerations that 60(b)(4) motions are because they do not
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carry the same jurisdictional and due process concerns. See, e.g., Hertz, 16 F.3d at
1130 (holding only that Rule 60(b)(4) motions are not subject to the “reasonable
time” requirement). Thus, they “must be made within a reasonable time.” Fed. R.
Civ. P. 60(c)(1). Even assuming again that we should not expect Herrera to have
filed his motion before his attorney was licensed, the five-month delay that
followed his licensure surely was unreasonable. Therefore, we will not consider
the 60(b)(6) or 60(b)(3) claims.
Rule 55(c) provides an additional, less “stringent” standard: good cause. See
Jones v. Harrell, 858 F.2d 667, 669 (11th Cir. 1988). However, that standard
applies to setting aside an entry of default and is inapplicable in the instant case
because the district court, in fact, entered a default judgment. See Fed. R. Civ. P.
55(c) (providing the court may set aside an entry of default for good cause and a
default judgment under Rule 60(b)). Accordingly, our Rule 60(b) analysis governs
this issue. See
Harrell, 858 F.2d at 669 (“Because a judgment had not been
entered the trial court had the discretion to set aside the entry of default under Rule
55(c) rather than under the more stringent provisions of Fed. R. Civ. P. 60(b) that
would have controlled if judgment had been entered.”).
Therefore, we affirm the district court’s order denying Herrera’s requested
relief.
B. No. 13-12019 (The Partnerships and Plainview)
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Salman Coral Way Partners and C.W. Salman Partners (collectively, “the
Partnerships”) are partnerships organized under Florida law. Plainview Florida II,
Inc. (Plainview) owns a 50-percent share of each of the Partnerships. The
remaining 50 percent is owned by Granada & Associates, Inc. (Granada), which is
not a party to this appeal.
OFAC designated the Partnerships as SDNTs under the IEEPA on March 7,
2007, because of alleged ties to the North Valley Cartel (NVC). Specifically,
OFAC alleged that the Partnerships were owned by SDNT individuals who
themselves had ties to the NVC. The Partnerships argued that those individuals,
Carlos Saieh and Moises Saieh, had ownership interests in Granada, not any direct
interest in the Partnerships. Additionally, the OFAC press release did not mention
FARC. The Partnerships challenged their designation and received licenses from
OFAC to continue operations. OFAC de-listed the Partnerships, as well as
Granada and the Saiehs, on January 10, 2012.
As in Herrera’s case, Plaintiffs sought to execute against the Partnerships’
blocked assets under TRIA § 201. On August 31, 2011, Plaintiffs moved, ex parte,
for writs of garnishment against deposit accounts held by the Partnerships at
Terrabank, N.A. In support of the motion, Plaintiffs submitted the OFAC press
release documenting the Partnerships’ alleged ties to the NVC and affidavits from
two experts familiar with Colombian narcotrafficking. The affidavits, one from a
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Senior Analyst in the Office of Naval Intelligence and the other from a Colombian
Marine Corps officer, documented FARC’s ties to the NVC. Both testified that the
NVC, including its “individual members, divisions, and networks,” was an agency
or instrumentality of FARC based on the district court’s standard. The district
court granted the writs of garnishment on September 6, 2011. 18 Based on the fact
that OFAC had designated the Partnerships as SDNTs because of alleged ties to the
NVC, the district court found that they were agencies or instrumentalities of the
NVC. Because of the testimony that the NVC, including its members, divisions,
and networks, was an agency or instrumentality of FARC, the district court
determined that the Partnerships were in turn agencies or instrumentalities of
FARC, 19 opening their blocked assets to execution by Plaintiffs under TRIA § 201.
The Partnerships had not previously been directly linked to FARC by OFAC or
any other executive or judicial authority.
The district court further determined that the Partnerships were not entitled
to notice or an opportunity to be heard. Specifically, the court held that because
TRIA § 201 preempts Florida garnishment law and does not contain any provisions
for notice or an opportunity to be heard, the Partnerships would not be afforded
18
The writ as to Plainview’s account was issued in error because it was never a SDNT.
Plaintiffs resolved the matter by returning the amount in Plainview’s account to Plainview.
19
The district court found that the NVC’s “OFAC designated member organizations,
partners, affiliates, and/or money laundering financial network members, are all agencies or
instrumentalities of the FARC, [including] the Terrabank, N.A. SDNT account holders who are
all OFAC designated members, affiliates, front persons, or entities within the [NVC].”
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those protections. Accordingly, the order granting the writs of garnishment was
entered without formal notice to the Partnerships. On September 8, 2011, the
district court stayed all garnishment proceedings pending the outcome of the
Mercurio appeal. The district court later granted a motion for clarification from
Plaintiffs, which allowed Plaintiffs to continue the garnishment action during
Mercurio’s pendency. 20 After service of the writs, Terrabank turned over the
contents of the deposit accounts on September 23 without filing an answer.
On October 7, 2011, Plaintiffs moved for a writ of execution against four
parcels of real property owned by the Partnerships. The district court granted the
writ on October 11. Like the order granting the writ of garnishment, this order
held that the Partnerships were not entitled to notice or an opportunity to be heard.
On November 29, 2011, United States Marshals levied on the real property
by posting notice in conspicuous places and providing direct notice to the
Partnerships, tenants, and management. They also published notice of the levy in a
local newspaper for four weeks. This was the first notice the Partnerships received
of the proceedings against their property. The Partnerships moved to vacate the
orders granting the writs of garnishment and execution and to quash the resulting
writs on February 21, 2012, arguing that they were entitled to notice and an
20
The Mercurio appeal concerned TRIA execution against a SDNT that had been
designated by OFAC under the Kingpin Act. Because the Partnerships had been designated
under the IEEPA, the district court allowed garnishment against them and other IEEPA-
designated SDNTs to continue.
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opportunity to be heard prior to issuance of the writs and requesting an evidentiary
hearing. They also argued that the district court incorrectly found them to be
agencies or instrumentalities of FARC. In support, they attached an affidavit from
their accountant outlining their ownership structure: 50 percent owned by Granada
and 50 percent owned by Plainview. The affidavit also asserted that Granada’s
only capital contribution to the partnerships was its 1992 purchase of the 50
percent ownership stake and that Granada did not have access to the Partnerships’
bank accounts or control over its operations. The next day, the district court stayed
ruling on that motion and reminded Plaintiffs of previous orders staying execution
on the real property.
On January 9, 2013, we reversed the district court in Mercurio. The district
court then lifted the stay and ordered Plaintiffs to respond to the Partnerships’
motion to vacate. Plaintiffs’ response conceded that the Partnerships were entitled
to “some form” of due process and argued that they had received adequate notice
through the OFAC designations and the levy on the real property. Though
Plaintiffs had previously argued—and the district court had agreed—that the
Partnerships were not entitled to notice, the district court denied the Partnerships’
request to reply to this change in Plaintiffs’ argument. The district court denied the
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Partnerships’ motion to vacate on April 19, 2013. 21 It held that the Partnerships
received due process through (i) the notice of their OFAC designations, (ii) the
stay of the sale of the real property, (iii) the opportunity to challenge OFAC’s
designations both administratively and through judicial review, (iv) “the
requirement that the Plaintiffs file a motion and seek entry of a court order,” and
(v) the notice that came with the levy on the real property. The court further held
that OFAC’s removal of the Partnerships’ SDNT status was irrelevant because
OFAC’s regulations do not permit retroactive effect of de-listing. See 31 C.F.R. §
536.402.
The Partnerships timely filed a notice of appeal on April 29, 2013. We
granted their motion to stay the sale of the real property on July 9. On appeal, the
Partnerships argue that (1) they were denied constitutional due process, (2) they
21
For an order to be appealable, it must be final. 28 U.S.C. § 1291. Writs of
garnishment and orders denying relief from such writs are not appealable; typically, there is no
appellate jurisdiction until the district court enters an order directing the disposition of the
property. United States v. Branham, 690 F.3d 633, 635 (5th Cir. 2012) (per curiam). Because
Terrabank turned over the money in the subject accounts as soon as it received the writ, there
was no order from the district court directing disposition of the account. In its place, the order
denying the motion to vacate functions as a final, appealable order as to the garnishment
proceedings because it “end[ed] the litigation on the merits,” and there was nothing left for the
court to do because the judgment was already executed. See Green Tree Fin. Corp.-Ala. v.
Randolph,
531 U.S. 79, 86,
121 S. Ct. 513, 519 (2000) (internal quotation marks omitted);
Gillespie v. U.S. Steel Corp.,
379 U.S. 148, 152,
85 S. Ct. 308, 311 (1964) (“[T]he requirement
of finality is to be given a practical rather than a technical construction.” (internal quotation
marks omitted)). It also functions as a final, appealable order for the execution writs because the
only thing left to do there was hold the execution sale. See In re Martin Bros. Toolmakers, Inc.,
796 F.2d 1435, 1437 (11th Cir. 1986) (recognizing the “qualification of the [final judgment]
rule[] allowing review whenever an order directs immediate delivery of physical property and
subjects the losing party to irreparable harm” (internal quotation marks omitted)).
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were denied statutory entitlements to notice and a hearing, (3) the agency or
instrumentality standard applied by the district court was erroneous, and (4) the
evidence did not support the agency or instrumentality finding.
First, contrary to the district court’s decision, the notice the Partnerships
received of their OFAC designation was not sufficient as to the TRIA execution
proceedings. Such a designation provides notice to the designee that its assets
have been blocked and of a number of other consequences, including the potential
for TRIA execution. Having notice of the potential for proceedings without notice
of their timing, location, adverse parties, nature, etc., is not sufficient to satisfy due
process. The OFAC designation did not give the Partnerships notice that was
“reasonably calculated, under all the circumstances, to apprise interested parties of
the pendency of the action and afford them an opportunity to present their
objections,” Mullane v. Cent. Hanover Bank & Trust Co., 339 U.S. 306, 314, 70 S.
Ct. 652, 657 (1950), because it does not “give a person in jeopardy of serious
loss . . . opportunity to meet” that particular proceeding, Joint Anti-Fascist Refugee
Comm. v. McGrath,
341 U.S. 123, 171–72,
71 S. Ct. 624, 649 (1951) (Frankfurter,
J., concurring).
The notice conveyed to the Partnerships through the levy on their real
property, however, did provide sufficient notice of the execution proceedings. The
Supreme Court has specifically stated “that in most cases, the secure posting of a
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notice on the property of a person is likely to offer that property owner sufficient
warning of the pendency of proceedings possibly affecting his interests.” Greene
v. Lindsey, 456 U.S. 444, 452,
102 S. Ct. 1874, 1879 (1982). While a posting may
not be sufficient where the notice is not conveyed due to, for example, removal of
the posting by children, see
id. at 453–54, 102 S. Ct. at 1879–80, such argument is
not available where there is no evidence that the postings could not be relied upon
to convey notice, see Goldhofer Fahrzeugwerk GmbH & Co. v. United States,
885
F.2d 858, 862 (Fed. Cir. 1989). In fact, the Partnerships not only fail to provide
evidence that the postings were an unreliable means of providing notice under the
circumstances; they also received actual notice and appeared. Therefore, notice as
to the real property execution was adequate. 22 See Espinosa, 559 U.S. at
275, 130
S. Ct. at 1380.
The Partnerships were also afforded an opportunity to be heard. As
discussed supra, the Partnerships were not entitled to a pre-writ hearing.
Nevertheless, they had the opportunity to present evidence refuting the agency or
instrumentality designation. They simply did not present any evidence that
changed the district court’s position on the agency or instrumentality
determination.
22
We can also infer that the Partnerships received notice of the garnishment proceedings
against their accounts because their motion seeking relief from the real property execution also
challenged the writs of garnishment.
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Even if constitutional due process standards are met, the Partnerships argue
that the writs of garnishment and execution should be quashed for failure to
comply with Florida’s statutory requirements for garnishment and execution.
Despite the fact that the district court erred in holding that Florida law did not
apply, the circumstances indicate that the decision was harmless. The Partnerships
were not prevented from taking advantage of Florida law specifically providing for
third-party challenges to garnishment proceedings. See Fla. Stat. § 77.07(2). The
third party can move to dissolve the writ of garnishment by “stating that any
allegation in plaintiff’s motion for writ is untrue.” Id. If the relevant allegation—
here, agency or instrumentality status—is found to be untrue, the court dissolves
the writ.
Id. The Partnerships followed this procedure, and the district court, after
due consideration of their argument, concluded that the agency or instrumentality
allegation was “proved to be true.” See
id. It therefore properly denied the motion
to dissolve the writ. Any failure by the district court to conform to Florida’s notice
procedures was harmless because the Partnerships received actual notice and were
able to contest the allegations as provided in § 77.07; they merely failed to succeed
on the merits.
The execution of the real property was likewise proper under Florida law.
The Partnerships complain that Plaintiffs did not furnish the required affidavit,
rendering the execution invalid. See Fla. Stat. § 56.21; cf. In re King, 463 B.R.
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555, 566 (Bankr. S.D. Fla. 2011) (setting aside an execution sale where judgment
creditors failed to comply with the § 56.21 30-day requirement). However,
“[w]hen a particular provision of a statute relates to some immaterial matter, where
compliance is a matter of convenience rather than substance, or where the
directions of a statute are given with a view to the . . . conduct of business merely,
the provision may generally be regarded as directory” and not mandatory. Neal v.
Bryant,
149 So. 2d 529, 532 (Fla. 1962) (internal quotation marks omitted) (noting
the exception to the generally mandatory nature of statutory directives introduced
by the word “shall”). Here, we know that failure to provide the affidavit was
harmless because the Partnerships had actual notice of the execution proceedings
and simply failed to disprove the agency or instrumentality allegations over the
months between their receipt of notice and the district court’s denial of their
motions. Therefore, any failure to comply with statutory notice requirements is not
grounds for reversal.
The Partnerships, moreover, were afforded an opportunity to present
evidence to the district court rebutting Plaintiffs’ allegation that they were agencies
or instrumentalities of FARC. In fact, the Partnerships presented evidence of their
ownership, presumably under the incorrect understanding that § 1603(b) would
control for TRIA § 201. As discussed above regarding the writs of garnishment,
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the court properly found that evidence immaterial to the agency or instrumentality
allegation.
The Partnerships also argue that there was not a sufficient evidentiary basis
for the agency or instrumentality determination. This argument is unavailing. The
evidence Plaintiffs presented to the district court was sufficient to establish the
required relationship between FARC and the Partnerships, even if that relationship
was indirect. Cf. In re Air Crash Disaster Near Roselawn, Ind., on Oct. 31, 1994,
96 F.3d 932, 940–41 (7th Cir. 1996) (holding that an entity majority-owned by an
agency or instrumentality of a foreign state is itself an agency or instrumentality of
that foreign state under the FSIA). The district court therefore did not clearly err in
reaching the agency or instrumentality determination.
The remaining arguments raised by the Partnerships are meritless for reasons
set forth in the global discussion. Therefore, we affirm the district court and lift
the stay we imposed by order.
C. No. 13-11959 (Jamce Investments, Ltd., et al.)
The appellants here assert ownership of cash deposits held at various banks.
The organizational appellants are the Partnerships, Granada, Confecciones Lord
S.A. (Lord), ALM Investment Florida, Inc. (ALM), Villarosa Investments Florida,
Inc. (Villarosa), Karen Overseas, Inc. (Overseas), MLA Investments, Inc. (MLA),
Jacaria Florida, Inc. (Jacaria), Sunset & 97th Holdings, LLC (Sunset), and Jamce
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Investments, Ltd. (Jamce) (collectively, “the Organizations). The individual
appellants are Jacqueline Saieh (Jacqueline), Miriam Sutherlin (Miriam), Sandra
Saieh (Sandra), Laura Saieh (Laura), Karen Saieh (Karen), Kathya Saieh (Kathya),
Jaime Saieh (Jaime), Amelia Saieh (Amelia), Abdala Saieh (Abdala), Carlos Saieh
(Carlos), Carmen Siman de Jaar (Carmen), Armando Jaar (Armando), Ricardo Jaar
(Ricardo), and Moises Saieh (Moises) (collectively, “the Individuals”). 23
These appellants were all OFAC-designated SDNTs when Plaintiffs filed ex
parte motions for writs of garnishment against their blocked assets under TRIA on
September 7, 2011. Fifteen of the writs were issued to Terrabank as to accounts
held by Ricardo, Armando, Moises, Carlos, Carmen, Abdala, Jacaria, Lord, MLA,
Granada, Overseas, Villarosa, the Partnerships, and ALM. Five more were issued
to OceanBank, N.A. as to accounts held by Carmen, Abdala, Moises, Carlos,
Sunset, and ALM. One was issued to Wells Fargo, N.A. as to an account held by
Jamce. After obtaining OFAC’s approval, Terrabank turned the contents of the
accounts over to Plaintiffs’ attorneys without filing an answer to the writs on
23
Some of the Individuals have asserted standing to challenge the writ of garnishment
issued to Wells Fargo as to Jamce, claiming that Jamce was a trust and that they were its
beneficiaries. The district court rejected that assertion, finding that Jamce was a corporation. See
KMS Rest. Corp. v. Wendy’s Int’l, Inc., 361 F.3d 1321, 1324–25 (11th Cir. 2004) (recognizing
that corporations themselves—and not shareholders—are the only parties with standing as to
injuries against them). The Individuals give us no reasons to disturb that finding. Accordingly,
only Jamce has standing to challenge the issuance of a writ of garnishment against its account.
The Individuals with no personal interest in any of the assets garnished pursuant to the orders at
issue, Jacqueline, Miriam, Sandra, Laura, Karen, Kathya, Jaime, and Amelia, therefore do not
have standing. The other Individuals do not have standing to the extent that they challenge the
writ issued as to Jamce.
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September 23, 2011. The other banks filed answers, but the court entered turnover
judgments against them as to all writs. After judgment was entered, a number of
motions were filed seeking relief from the judgments. The final orders on appeal
here are an order discharging Terrabank, two turnover judgments, four orders
denying Rule 60(b) motions 24, and the denial of Jamce’s Rule 59(e) motion. The
order discharging Terrabank and the first turnover judgment were not timely
appealed, and we therefore do not have jurisdiction to consider them. Fed. R. App.
P. 4(a). Thus, only the later-in-time turnover judgment (against Jamce’s Wells
Fargo account), the denials of the Rule 60(b) motions, and the denial of Jamce’s
Rule 59(e) motion are at issue here.25
24
The Rule 60(b) motions were also filed pursuant to Rules 59(e) and 69(a)(1). The
district court correctly declined to consider the motions under Rule 59(e) because they were not
timely filed. See Fed. R. Civ. P. 59(e); Wright v. Preferred Research, Inc., 891 F.2d 886, 890
(11th Cir. 1990) (per curiam) (construing the old Rule 59(e), which included a deadline of 10
days after entry of judgment). Further, failure to comply with statutory law pursuant to Rule
69(a)(1) is not sufficient grounds to set aside a judgment under Rule 60(b)(4); the movant must
demonstrate denial of due process or a jurisdictional error.
Espinosa, 559 U.S. at 271, 130 S. Ct.
at 1377; Am. Bankers
Ins., 198 F.3d at 1338 (“An appeal of a ruling on a Rule 60(b) motion . . .
does not raise issues in the underlying judgment for review.”). We note that these appellants do
not argue that the district court “lacked even an arguable basis for jurisdiction.” See
Espinosa,
559 U.S. at 271, 130 S. Ct. at 1377 (internal quotation marks omitted). Their Rule 60(b)(4)
motions, then, rest on an alleged denial of due process because they make no other argument that
would constitute grounds for setting aside the judgment under Rule 60(b)(4).
25
For an order to be appealable, it must be final. 28 U.S.C. § 1291. With respect to the
writs issued to OceanBank and Wells Fargo, finality was accomplished when the district court
entered turnover judgments against them after receiving their answers to the writs. Writs of
garnishment and orders denying relief from such writs are not appealable; typically, there is no
appellate jurisdiction until the district court enters an order directing the disposition of the
property. Branham, 690 F.3d at 635. Because Terrabank turned over the money in the subject
accounts as soon as it received the writ, there was no order from the district court directing
disposition of the account. In its place, the order discharging Terrabank functions as a final,
appealable order because it “end[ed] the litigation on the merits,” and there was nothing left for
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Jamce appeals a turnover judgment entered against an account it held at
Wells Fargo. However, Jamce waived any opposition to Plaintiffs’ motion seeking
entry of judgment on the writ of garnishment when, after receiving notice of the
motion through counsel, it failed to timely respond to the motion. The day after
the district court entered the judgment, Jamce filed a Rule 59(e) motion, which the
district court denied, specifically noting the electronic notice provided. Jamce
appealed the judgment itself on the day it was issued and later amended the notice
of appeal to include the Rule 59(e) motion denial. Because Jamce waived
opposition to the motion seeking entry of judgment, we affirm the judgment.
Further, a Rule 59(e) motion cannot be used simply as a tool to reopen litigation
where a party has failed to take advantage of earlier opportunities to make its case.
Michael Linet, Inc. v. Vill. of Wellington, 408 F.3d 757, 763 (11th Cir. 2005).
Therefore, we also affirm the order denying Jamce’s Rule 59(e) motion.
A number of the Individuals and Granada appeal the order denying their
Rule 60(b) motion to set aside the execution of the real property owned by the
Partnerships. In the denial, the district court held that they did not have standing
because they did not own the real property under Florida law. The appellants do
the court to do because the judgment was already executed. See Randolph, 531 U.S. at 86, 121
S. Ct. at 519 (internal quotation marks omitted);
Gillespie, 379 U.S. at 152, 85 S. Ct. at 311.
Additionally, the denials of the Rule 60(b) motions are appealable. Am. Bankers
Ins., 198 F.3d
at 1338. Rule 59(e) motion denials are likewise appealable.
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not challenge that determination here, and they have thus waived argument on that
issue. Marek v. Singletary, 62 F.3d 1295, 1298 n.2 (11th Cir. 1995).
On November 2, Carmen, Armando, Ricardo, Carlos, and Moises moved to
quash the garnishment, to reconsider the order granting Plaintiffs’ motion for an
issuance of writs of garnishment, for relief from judgment, to set aside the
judgment, to stay the garnishment, and to deposit garnished funds into the court
registry. On November 21, they also moved to alter judgment, to amend or correct
the order on Plaintiffs’ motion for judgment, to stay execution, and to deposit
garnished funds into the court registry. After the stay discussed above was lifted,
the district court denied the motions on April 9 and 12, 2013, respectively. The
Organizations brought a similar motion seeking relief on April 30, 2012, and the
district court denied it on April 25, 2013.
The appeal of those remaining orders—all denying Rule 60(b) motions—
also fails. Contra the argument of these appellants, TRIA § 201 permits execution
against the assets of parties not named in the original lawsuit; that is the purpose of
the specific allowance for execution against agencies or instrumentalities provided
by that section. See Mercurio, 704 F.3d at 913 & n.5 (citing Weinstein v. Islamic
Republic of Iran,
609 F.3d 43, 50 (2d Cir. 2010)).
The appellants’ arguments regarding an alleged denial of due process also
lack merit because any such violation was harmless. As we concluded in the
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global discussion, no pre-deprivation hearing was warranted. Moreover, the
appellants here had sufficient opportunities to present their arguments to the
district court. Ultimately, the district court gave due consideration to these
arguments.
The district court made the factual determination that each of the appellants
in this appeal was an agency or instrumentality of FARC. Even if the appellants
had given us reason to believe that that determination was clear error (they have
not), they certainly do not give us reason to believe that such error is grounds for
setting aside a judgment. The remaining grounds advanced by the appellants for
reversing the district court are meritless, as detailed in the global discussion.
The turnover judgment as to Jamce’s property was properly entered after
Jamce defaulted. The Rule 60(b) motions do not establish any grounds on which
we may grant such extraordinary relief. We therefore affirm the orders from which
this appeal is brought.
D. No. 13-12337 (Sutherlin)
Luis Sutherlin claims that Jamce is a trust, that he is its beneficiary, and that
he is thus entitled to challenge the execution of assets owned by Jamce. However,
the district court found that Jamce is a corporation. Sutherlin does not give us
reason to disturb that finding. Therefore, only Jamce has standing to challenge the
execution of its assets. See KMS Rest. Corp., 361 F.3d at 1324–25 (recognizing
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that corporations themselves—and not shareholders—are the only parties with
standing to contest injuries to the corporation). Consequently, this appeal is
dismissed.
E. No. 13-12116 (Individual Claimants)
The appellants here appeal a series of turnover judgments for accounts in the
names of Carmen, Carlos, Armando, and Moises at UBS AG, Bank of America
(BOA), and HSBC Bank USA, N.A. (HSBC), as well as an order denying a Rule
59(e) motion.26 All the appellants party to this appeal were SDNTs when Plaintiffs
initiated garnishment proceedings against them. Significantly, the appellants made
appearances in the district court after receiving notice of the garnishment
proceedings and well before judgment was entered against them. First, they filed a
motion to quash the writs of garnishment issued to UBS and BOA on November 2,
2011. Then, on February 12, 2013, they filed a brief opposing a lift of the stay.
Finally, they filed multiple motions opposing entry of judgment.
As an initial matter, the district court’s denial of the Rule 59(e) motion on
jurisdictional grounds was not proper. The district court based that decision on
Griggs v. Provident Consumer Discount Co., 459 U.S. 56, 58,
103 S. Ct. 400, 402
(1982) (per curiam). The district court quoted that opinion’s language for the
26
They also appeal an order denying relief from a writ of garnishment issued to BOA as
to an account held by Brunello. We address that writ and the associated turnover judgment
below.
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proposition that the filing of a notice of appeal divested it of jurisdiction to
consider the Rule 59 motion. Id. (“The filing of a notice of appeal is an event of
jurisdictional significance—it confers jurisdiction on the court of appeals and
divests the district court of its control over those aspects of the case involved in the
appeal.”). However, Griggs was based on the language of an old version of
Federal Rule of Appellate Procedure 4, which provided that a notice of appeal filed
during the pendency of a Rule 59 motion would have no effect. In 1993, Rule 4(a)
was specifically amended in response to Griggs and now provides that a notice of
appeal filed during the pendency of a Rule 59 motion is simply suspended. See
Katerinos v. U.S. Dep’t of Treasury,
368 F.3d 733, 737–38 (7th Cir. 2004) (“The
rule therefore was amended in 1993 to provide that a premature notice of appeal is
no longer void, but merely suspended; it becomes effective . . . when the order
disposing of the last such remaining motion is entered.” (internal quotation marks
omitted)); see also Fed. R. App. P. 4(a)(4)(B)(i). The district court retained
jurisdiction to consider the Rule 59 motion, and we have jurisdiction because the
notice of appeal became effective following the district court’s denial of that
motion. In addition, the appellants here filed amended notices of appeal after the
district court disposed of the Rule 59(e) motion giving us jurisdiction to consider
the appeal of the denial. See Stallworth v. Shuler,
758 F.2d 1409, 1410 (11th Cir.
1985) (per curiam).
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The appellants here first claim that their due process rights were violated by
the district court’s failure to provide them with notice and an opportunity to be
heard. Notwithstanding their complaints about lack of formal service, any failure
to provide notice was harmless because the appellants received actual notice and
appeared. First, they filed a motion to quash the writs of garnishment issued to
UBS and BOA on November 2, 2011. Then, on February 12, 2013, they filed a
brief opposing a lift of the stay. Finally, they filed multiple motions opposing
entry of judgment. Therefore, because they appeared, the appellants were not
prejudiced by the lack of notice because they received actual notice. Cf. Murphy v.
Travelers Ins. Co., 534 F.2d 1155, 1159 (5th Cir. 1976) (holding that a party’s
voluntary appearance “waiv[ed] any potential defects founded on service or venue
problems”).
The Rule 59(e) motion does not save the appellants, either. We review
denials of Rule 59(e) motions for an abuse of discretion. Thomas v. Farmville
Mfg. Co., 705 F.2d 1307, 1307 (11th Cir. 1983) (per curiam). The district court’s
denial of the Rule 59(e) motion based on a miscomprehension of the law was an
abuse of discretion. United States v. Merrill,
513 F.3d 1293, 1301 (11th Cir.
2008). However, we affirm the denial on the merits. See Parks v. City of Warner
Robins,
43 F.3d 609, 613 (11th Cir. 1995) (“[W]e may affirm the district court’s
decision on any adequate ground, even if it is other than the one on which the court
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actually relied.”). The appellants here simply failed to litigate the agency or
instrumentality issue when they had notice of the proceedings. They then
attempted to use the Rule 59(e) motion to reopen litigation, an improper basis for
moving under Rule 59(e). Michael Linet, Inc., 408 F.3d at 763 (holding that a
party “cannot use a Rule 59(e) motion to relitigate old matters, raise argument or
present evidence that could have been raised prior to the entry of judgment”). We
thus affirm the denial of the motion.
The appellants here also contend that they were improperly designated as
agencies or instrumentalities. We have already determined that the district court
applied the correct standard. Moreover, we cannot say that the district court
clearly erred in making the factual determination that they were agencies or
instrumentalities of FARC. Plaintiffs proffered evidence of connections to FARC
that met the district court’s standard, and the appellants here failed to rebut that
evidence.
Finally, any other arguments raised do not support reversal. Therefore, we
affirm the district court’s orders at issue in this appeal.
F. No. 13-12171 (Brunello)
Brunello, Ltd. is a Caymanian corporation that was designated a SDNT on
November 8, 2006, for alleged ties to the NVC. It began the de-listing process
soon after that. Plaintiffs moved for a writ of garnishment against BOA on
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September 15, 2011, where they believed Brunello held a blocked asset. The
district court issued the writ on September 20, 2011. BOA answered the writ
claiming that it was indebted to Brunello. On November 16, it amended the
answer, disclaiming any debt owed to Brunello and informing the district court and
Plaintiffs that Merrill Lynch, Pierce, Fenner & Smith, Inc., (Merrill Lynch) was
indebted to Brunello. BOA had mistakenly reported to OFAC that it held an asset
belonging to Brunello; Brunello actually held the account in question with Merrill
Lynch. Both BOA and Merrill Lynch are wholly owned subsidiaries of Bank of
America Corporation.
Meanwhile, Brunello had successfully challenged its OFAC designation,
which was reflected in OFAC’s updated SDNT list, published on January 10, 2012.
Brunello then moved to dissolve the writ of garnishment on January 23, 2013,
asserting that BOA did not possess any of its assets. On January 29, while that
motion was pending, Plaintiffs moved to amend the writ of garnishment to add
Merrill Lynch as a party indebted to Brunello. Brunello filed its opposition to that
motion on January 30, and, the next day, the district court denied Brunello’s
motion to quash and granted Plaintiffs’ motion to amend. The clerk issued the
amended writ on March 13. Merrill Lynch was served on April 8. The district
court entered a turnover judgment against Merrill Lynch on May 6, and Brunello
timely filed an appeal. While Brunello raises many of the same arguments
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discussed above, it uniquely asserts that the district court improperly related back,
nunc pro tunc, the writ of garnishment. Because we agree with Brunello on that
point, we reverse the turnover judgment and remand to the district court with
instructions to quash the underlying writ of garnishment and return any turned over
funds.
The purpose of a nunc pro tunc order is not “to revise history, but only to
correct inaccurate records.” Justice v. Town of Cicero, 682 F.3d 662, 664 (7th Cir.
2012) (internal quotation marks omitted).
A nunc pro tunc order merely recites court actions previously taken
but not properly or adequately recorded. The failure of a court to act,
or its incorrect action, can never authorize a nunc pro tunc entry. If a
court does not render judgment or renders one which is imperfect or
improper, it has no power to remedy any of these errors or omissions
by treating them as clerical misprisions.
Cypress Barn, Inc. v. W. Elec. Co., 812 F.2d 1363, 1364 (11th Cir. 1987) (citation
and internal quotation marks omitted). In other words, a nunc pro tunc order’s
“purpose . . . is to correct mistakes or omissions in the record so that the record
properly reflects the events that actually took place.” Glynne v. Wilmed
Healthcare,
699 F.3d 380, 383–84 (4th Cir. 2012). It cannot change substantive
rights retroactively. See Transamerica Ins. Co. v. South,
975 F.2d 321, 325–26
(7th Cir. 1992).
Here, the nunc pro tunc order substituted a new party that actually was
indebted to Brunello for one that was not. A nunc pro tunc order that has the effect
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of retroactively inserting in a writ a garnishee who was never mentioned in the
original writ, was not a party to the proceedings, and was never served with the
original writ is perhaps the most obvious violation of the limitations on the
doctrine. Such an order does not “merely recite[] court actions previously taken
but not properly or adequately recorded,” Cypress Barn, 812 F.2d at 1364, “correct
inaccurate records,”
Justice, 682 F.3d at 664 (internal quotation marks omitted), or
“reflect[] the events that actually took place,”
Glynne, 699 F.3d at 384. Rather, it
“revise[s] history,”
Justice, 682 F.3d at 664, “to remedy [an] error” borne of “its
incorrect action,” Cypress
Barn, 812 F.2d at 1364 (internal quotation marks
omitted). It works an injustice on the parties that were not earlier named in the
writ; it does not correct, in Plaintiffs’ words, a mere “wrinkle.” See Sage v. Cent.
R.R. Co. of Iowa,
93 U.S. 412, 417 (1876) (“While it is true that the court may
enter an order in a cause nunc pro tunc, where the action asked for has been
delayed by or for the convenience of the court, it is never done where the parties
themselves have been at fault, or where it will work injustice.” (citations omitted)).
In response to Brunello’s argument that the nunc pro tunc order was entered
improperly, Plaintiffs allege that the garnishee originally named in the writ, BOA,
answered the writ in a “misleading” fashion and engaged in “questionable
conduct.” Assuming that claim is true, it is irrelevant. The proper garnishee was a
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completely separate entity. 27 It is immaterial that both garnishees were owned by
the same entity or that BOA may have misled Plaintiffs.
Thus, the motion for a writ of garnishment against Merrill Lynch was filed
on the date it was filed, not the date on which the writ against BOA was filed,
which came after Brunello’s de-listing. For that reason, TRIA § 201’s requirement
that the subject asset is “blocked” was not met as a matter of law. See Holy Land
Found., 722 F.3d at 687. We reverse the turnover judgment and remand to the
district court with instructions to quash the writ of garnishment.
IV. Conclusion
In the proceedings below, it seems no party was free of fault. Plaintiffs
should have provided formal notice of the garnishment and execution proceedings
to the owners of the property, as Florida law provides. Initially, the district court
incorrectly concluded that no process was due to the owners of property here, none
of whom could be deemed to be on notice of the underlying proceedings against
FARC. Ultimately, though, Claimants bear their share of the blame for either
sitting on their rights to challenge the allegations against them or simply failing to
rebut the charges. Therefore, with the exception of the turnover judgment against
Brunello’s account, we affirm the district court.
27
The district court did not determine that BOA and Merrill Lynch were alter egos.
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AFFIRMED IN PART; DISMISSED IN PART; REVERSED AND
REMANDED IN PART.
67
