P. KEVIN CASTEL, District Judge:
The petitioners are family members and the estates of seventeen U.S. Air Force servicemembers killed in the 1996 terrorist attacks on the Khobar Towers in Saudi Arabia. They seek to enforce a judgment against the Islamic Republic of Iran, the Iranian Ministry of Information and Security, and the Iranian Islamic Revolution Guard Corps, all of which were found by the United States District Court for the District of Columbia (Hon. Royce C. Lamberth, U.S.D.J.) (the "District of Columbia Court") to have provided support for the terrorist attacks.
Petitioners move for summary judgment and seek an order compelling respondent Bank of Tokyo Mitsubishi UFJ, New York Branch ("Bank of Tokyo") to turn over funds that they claim belong to Iran-based entities that function as mere instrumentalities of the Islamic Republic of Iran. The funds were initially electronic funds transfers ("EFTs") that were blocked pursuant to directives of the United States Department of Treasury, and now sit in interest-bearing accounts held by the Bank of Tokyo. The Bank of Tokyo does not oppose the motion.
The petitioners have come forward with evidence that the funds they seek to attach belong to instrumentalities of the Islamic Republic of Iran, and were lawfully blocked pursuant to presidential orders and Department of Treasury authority. For reasons that will be explained, such assets may be attached in satisfaction of a judgment. The petitioners' motion is therefore granted.
For the purpose of this motion, the following facts are undisputed, and the record is scrutinized in the light most favorable to the respondent. See, e.g., Costello v. City of Burlington, 632 F.3d 41, 45 (2d Cir.2011).
On June 25, 1996, an attack on the Khobar Towers complex in Saudi Arabia killed nineteen U.S. Air Force personnel. (Pet. 56.1 ¶ 1.) The petitioners in this case include representatives of the estates for seventeen of those victims. (Pet. 56.1 ¶¶ 2-4.)
Petitioners were plaintiffs in two actions filed in the District of Columbia Court. On September 29, 2000, certain of the petitioners filed an action pursuant to the Foreign Sovereign Immunities Act, 28 U.S.C. § 1330, et seq. (the "FSIA"). See Heiser v. Iran, 00 Civ. 2329 (D.D.C.) (RCL). (Pet. 56.1 ¶ 3.) The FSIA establishes exclusive federal jurisdiction over actions against foreign states, 28 U.S.C. § 1330, and includes a terrorism exemption for a foreign state's immunity, 28 U.S.C. § 1605A. Petitioners asserted that the Islamic Republic of Iran, the Iranian Ministry of Information & Security (the "MOIS") and the Iranian Revolutionary Guard Corps (the "IRGC") were liable to them for wrongful death and intentional infliction of emotional distress. (Pet. 56.1 ¶ 3.) Additional petitioners in this action brought similar claims against the same defendants in a second action filed on October 9, 2001, Campbell v. Iran, 01 Civ. 2104 (D.D.C.) (RCL). (Pet. 56.1 ¶ 4.) The District of Columbia Court consolidated the two cases, (Pet. 56.1 ¶ 5.)
On December 22, 2006, the District of Columbia Court entered default judgment against Iran, the MOIS and the IRGC. See Estate of Heiser v. Islamic Republic of Iran, 466 F.Supp.2d 229 (D.D.C.2006). It concluded that the three defendants were jointly and severally liable for damages totaling $254,431,903. (Pet. 56.1 ¶ 6.)
On January 13, 2009, the District of Columbia Court retroactively applied the recently enacted section 1605A of the FSIA, 28 U.S.C. § 1605A,
The District of Columbia Court subsequently issued orders directed to the collection of the two judgments. On February 7, 2008, it concluded that, pursuant to 28 U.S.C. § 1610(c), a period had elapsed following entry of judgment sufficient to authorize an attachment in aid and execution of the December 2006 judgment. (Pet. 56.1 ¶ 9; Seniawski Dec. Ex. 4.) On May 10, 2010, it reached the same conclusion as to the September 2009 supplemental judgment. (Pet. 56.1 ¶ 10; Seniawski Dec. Ex. 5.)
Petitioners commenced this action by filing a petition for a turnover order pursuant to Rule 69 and sections 5225 and 5227 of the CPLR. (Docket #1.) Petitioners assert that the respondent Bank of Tokyo possesses assets belonging instrumentalities of the MOIS, the IRGC and the government of Iran. (Pet. ¶¶ 25-26.) The Petition states that the respondent is named as a defendant pursuant to CPLR § 5225(b), which permits a judgment creditor to commence a special proceeding against a person in possession or custody of money owed to a judgment creditor. (Pet. ¶ 6.) The respondent asserts no right to these assets. (Pet. 56.1 ¶ 27.)
Petitioners seek to recover funds that were blocked pursuant to Presidential Executive Orders and directives issued by the Office of Foreign Assets Control ("OFAC"), an agency of the United States Department of Treasury. These funds are held by entities that OFAC has designated as Specially Designated Nationals ("SDNs"), and deemed "individuals and companies owned or controlled by, or acting for or on behalf of, targeted countries."
It is undisputed that respondent Bank of Tokyo maintains bank accounts holding the blocked assets of the SDNs listed above. (Pet. 56.1 ¶ 25.) In its memorandum of law, Bank of Tokyo states that it has frozen these assets pursuant to OFAC directive, (Response Mem. at 2.) Under 31 C.F.R. § 595.203, Bank of Tokyo was required to maintain the funds in interest-bearing accounts.
On August 23, 2011, Magistrate Judge Dollinger, to whom this action was referred for general pretrial supervision, signed an order directing service of the Petition and other relevant documents to all third parties, with the documents translated into Farsi. (Docket #25.) The respondent produced contact information for the Iran Entities. (Pet 56.1 ¶ 22.) Specifically,
In its response to the present motion, Bank of Tokyo states that it "does not oppose the ultimate relief sought by Petitioners in the Motion, namely, the turnover of the Blocked Assets." (Response Mem. at 1.) The United States also has submitted letter-briefs setting forth its views on the petitioners' summary judgment motion. The United States has neither supported nor opposed the motion.
Summary judgment "shall" be granted "if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law." Rule 56(a), Fed.R.Civ.P. It is the burden of a movant on a summary judgment motion to come forward with evidence on each material element of his claim or defense, sufficient to demonstrate that he or she is entitled to relief as a matter of law. Vt. Teddy Bear Co. v. 1-800 Beargram Co., 373 F.3d 241, 244 (2d Cir.2004). In raising a triable issue of fact, the non-movant carries only "a limited burden of production," but nevertheless "must `demonstrate more than some metaphysical doubt as to the material facts,' and come forward with `specific facts showing that there is a genuine issue for trial.'" Powell v. Nat'l Bd. of Med. Exam'rs, 364 F.3d 79, 84 (2d Cir.2004) (quoting Aslanidis v. U.S. Lines, Inc., 7 F.3d 1067, 1072 (2d Cir.1993)).
A fact is material if it "might affect the outcome of the suit under the governing law," meaning that "the evidence is such that a reasonable jury could return a verdict for the nonmoving party." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). The Court must view the evidence in the light most favorable to the non-moving party and draw all reasonable inferences in its favor, and may grant summary judgment only when no reasonable trier of fact could find in favor of the nonmoving party. Costello, 632 F.3d at 45; accord Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 585-88, 106 S.Ct. 1348, 89 L.Ed.2d 538 (1986). In reviewing a motion for summary judgment, the court may scrutinize the record, and grant or deny summary judgment as the record warrants. Rule 56(c)(3). In the absence of any disputed material fact, summary judgment is appropriate. Rule 56(a).
Though the respondent does not oppose the motion, petitioners still must establish that they are entitled to judgment as a matter of law. "If the evidence submitted in support of the summary judgment motion does not meet the movant's burden of production, then `summary judgment must be denied even if no opposing evidentiary matter is presented.'" Vt. Teddy Bear Co., 373 F.3d at 244 (emphasis in original) (quoting Amaker v. Foley, 274 F.3d 677, 681 (2d Cir.2001)); see also Champion v. Artuz, 76 F.3d 483, 486 (2d Cir.1996) (summary judgment "may properly be granted only if the facts as to which there is no genuine dispute show that the moving party is entitled to judgment as a matter of law.") (quotation marks and citation omitted).
The Court first reviews FSIA provisions that permit a successful plaintiff to attach funds that have been blocked pursuant to executive order and OFAC directives. Second, the Court examines presidential authority to block certain international financial transactions and OFAC's implementation of its blocking regime. Finally, the Court examines the evidence submitted by petitioners that the entities from which petitioners seek recovery are instrumentalities of the Republic of Iran.
The FSIA "provides the exclusive basis for subject matter jurisdiction over all civil actions against foreign state defendants, and therefore for a court to exercise subject matter jurisdiction over a defendant the action must fall within one of the FSIA's exceptions to foreign sovereign immunity." Weinstein v. Islamic Republic of Iran, 609 F.3d 43, 47 (2d Cir.2010). Section 1605(a)(7), which has since been repealed with many of its terms incorporated into 28 U.S.C. § 1605A,
The FSIA defines a "foreign state" to include "a political subdivision of a foreign state or an agency or instrumentality of a foreign state." 28 U.S.C. § 1603(a). It defines an "instrumentality" to include "a separate legal person, corporate or otherwise" that either is "an organ of a foreign state" or a person "whose shares or other ownership interest is owned by a foreign state or political subdivision thereof," provided that it is not a citizen of the United States or "created under the laws of any third country." 28 U.S.C. § 1603(b)(l-3). The District of Columbia Court concluded that the defendants in that action were subject to jurisdiction under the then-operative section 1605(a)(7). which provided a terrorism exemption from a foreign government's immunity against money damages claims in the United States. 466 F.Supp.2d at 254-55. It also concluded that those defendants were liable to the plaintiffs. Id. at 271-356.
The Terrorism Risk Insurance Act of 2002 ("TRIA") provides for attachment in aid of execution of a judgment. Section 201(a) of TRIA, which is codified as a note to 28 U.S.C. § 1610, states:
Pub. L. 107-297, Title II, § 201(a), (b), (d), Nov. 26, 2002, 116 Stat. 2337, as amended. Pub. L. 112-158, Title V, § 502(e)(2), Aug. 10, 2012, 126 Stat. 1260. According to the Second Circuit, it is "beyond cavil that Section 201(a) of the TRIA provides courts with subject matter jurisdiction over post-judgment execution and attachment proceedings against property held in the hands of an instrumentality of the judgment-debtor, even if the instrumentality is not itself named in the judgment." Weinstein, 609 F.3d at 50.
Separately, section 1610(g) permits attachment in aid of an execution of a judgment entered under section 1605A. It provides that "the property of a foreign state against which a judgment is entered under section 1605A, and the property of an agency or instrumentality of such a state, including property that is a separate juridical entity or is an interest held directly or indirectly in a separate juridical entity, is subject to attachment in aid of execution, and execution, upon that judgment as provided in this section, regardless of the level of economic control over the property by the government of the foreign state." 28 U.S.C. § 1610(g)(1)(A). The District of Columbia Court observed that the statute "`expand[s] the category of foreign sovereign property that can be attached; judgment creditors can now reach any U.S. property in which Iran has any interest ... whereas before they could only reach property belonging to Iran.'" Estate of Heiser v. Islamic Republic of Iran, 807 F.Supp.2d 9, 18 (D.D.C.2011) (quoting Peterson v. Islamic Republic of Iran, 627 F.3d 1117, 1123 n. 2 (9th Cir. 2010)). "Thus, the only requirement for attachment or execution of property is evidence that the property in question is held by a foreign entity that is in fact an agency or instrumentality of the foreign state against which the Court has entered judgment." Id. at 19,
The International Emergency Economic Powers Act, 50 U.S.C. § 1701, et seq. ("IEEPA"), authorizes the President to regulate international economic transactions. Specifically, it permits the executive branch to "investigate, regulate or prohibit ... transfers of credit or payments... by ... any banking institution, to the extent that such transfers ... involve any interest of any foreign country... [and any] transactions involving ... any property in which any foreign country... has any interest." 50 U.S.C. § 1702(a)(1). Presidents have issued several executive orders under the IEEPA, including Executive Order No. 12947, 60 Fed.Reg. 5079 (Jan. 23, 1995) (Prohibiting Transactions with Terrorists Who Threaten to Disrupt the Middle East Peace Process), Executive Order No. 13224, 66 Fed. Reg. 49079 (Sept. 23, 2001) (Blocking Property and Prohibiting Transactions With Persons Who Commit, Threaten to Commit, or Support Terrorism), and Executive Order No. 13382, 70 Fed.Reg. 38567 (June 28, 2005) (Blocking Property of Weapons of Mass Destruction Proliferators and Their Supporters), and Executive Order No. 13599, 77 Fed.Reg. 6659 (Feb. 5, 2012) (Blocking Property of the Government of Iran and Iranian Financial Institutions).
OFAC has designated the following entities as SDNs: Bank Sepah, Bank Sepah International, PLC ("BSI"); Iranohind Shipping Company ("Iranohind"); Azores Shipping Company LL FZE ("Azores"); IRISL Benelux NV; Export Development Bank of Iran ("EDBI"); Bank Melli; and the Islamic Republic of Iran Shipping Lines ("IRISL"). (Office of Foreign Assets Control, Specially Designated Nationals and Blocked Persons List, January 24, 2013, at 97, 99, 100, 161, 221, 233.)
In support of its summary judgment motion, the petitioners have submitted the affidavit of Patrick L. Clawson, Ph.D, the Director of Research of the Washington Institute for Near East Policy. Clawson states that he has specialized knowledge concerning financial accounts, wire transfers and other transactions involving assets blocked by OFAC directives. (Clawson Aff't ¶ 10.) Clawson also asserts that he is knowledgeable as to bank charters and ownership, particularly as to Iran's national and state-owned banks. (Clawson Aff't ¶ 10.) He swears that he closely follows Iran's press and political system and has researched its economy and commercial enterprises. (Clawson Aff't ¶¶ 9-12.)
Clawson asserts that the following entities are owned at least in part by the government of the Islamic Republic of Iran:
According to Clawson, the Central Bank of Iran expressly recognizes Bank Melli Iran as a "commercial government-owned bank." (Clawson Aff't ¶ 13.) Bank Melli states in a financial report available on its website that "[t]he capital is completely
Based on the express statements of Bank Melli, the petitioners have established that Bank Melli is an "instrumentality" of the government of Iran. 28 U.S.C. § 1603(b).
Iran nationalized ownership of Bank Sepah in 1980. (Clawson Aff't ¶ 14.) On its website, the Central Bank of Iran describes Bank Sepah as a "commercial government-owned bank."
Because the Central Bank of Iran identifies Bank Sepah as a "commercial government-owned bank," petitioners have established that Bank Sepah is an "instrumentality" of the government of Iran. 28 U.S.C. § 1603(b).
On January 9, 2007, the Treasury Department concluded that BSI is owned and controlled by Bank Sepah. (Clawson Aff't ¶ 15.) BSI's company website states that it "is a wholly-owned subsidiary of Bank Sepah Iran."
As noted, the Central Bank of Iran describes Bank Sepah as a "commercial government-owned bank." As a wholly-owned subsidiary of Bank Sepah operating in London, BSI, like its parent company, qualifies as an "instrumentality" of the government of Iran. 28 U.S.C. § 1603(b).
The website of the Central Bank of Iran lists EDBI as a "specialized government bank."
This Court affords little weight to Clawson's statements about what is "widely known" about EDBI's operations. These unsupported statements are not accompanied by any citation to the record or publicly available factual information. Nevertheless, the fact that the Central Bank of Iran lists EDBI as a "specialized government bank" and that OFAC has deemed EDBI an intermediary in Bank Sepah financing operations is sufficient evidence that EDBI functions as an instrumentality
OFAC recognizes IRISL as under control by the government of Iran, and acting as the country's "national maritime carrier...."
As Iran's "national maritime carrier," IRISL functions as an instrumentality of the government of Iran. 28 U.S.C. § 1603(b).
Petitioners assert that Azores, Iranohind and IRISL Benelux NV are all entities controlled by IRISL, citing to conclusions reached by the United States Treasury, as well as British and European Union Authorities.
The United States Treasury has frozen the assets of Azores and announced restrictions on transactions related to the company.
The United States Treasury has designated Iranohind as engaging in proliferation activities. It has stated that the company was "found to be owned or controlled by or acting or purporting to act for or on behalf of, director or indirectly, IRISL."
The United States Treasury has designated IRISL Benelux NV as engaging in proliferation activities, stating that it was "found to be owned or controlled by or
Based on the foregoing, this Court concludes that Azores, Iranohind and IRISL Benelux NV functioned as instrumentalities of the government of Iran. 28 U.S.C. § 1603(b). Each is owned or controlled by, or acts on behalf of IRISL, which is Iran's national carrier.
Petitioners have come forward with evidence that the Iran Entities are agencies and instrumentalities of Iran. In addition, OFAC has listed each of these entities as SDNs. (Office of Foreign Assets Control, Specially Designated Nationals and Blocked Persons List, January 24, 2013, at 97, 99, 100, 161, 221, 233.)
Petitioners have submitted a chart produced by the respondent reflecting the EFT transactions, including the transactions' dates, the sending banks and the transactions' originators and beneficiaries. (Seniawski Dec. Ex. 14.) Specifically, the chart reflects that BSI was the intended beneficiary of a $90,628.80 EFT of June 21, 2007; Azores originated a $4,740 EFT of September 29, 2008; IRISL Benelux NV was the intended beneficiary of two EFTs of January 21 and 22, 2009, the first in an amount of $61,974 and the second in an amount of $99,974; EDBI was intended beneficiary of a $97,767.50 EFT of April 24, 2009; and Bank Melli was issuing bank in a $2,181.88 EFT of July 26, 2010. (Seniawski Dec. Ex. 14.) The respondent participated in these transactions, either as the sending bank or the beneficiary's bank. (Seniawski Dec. Ex. 14.) This chart is evidence that the Iran Entities have an interest in the blocked assets that warrant them to attachment in aid of execution of judgment. In addition, the Iran Entities received notice of this action and have failed to appear and assert a claim as to any of the assets.
Pursuant to Rule 69(a), Fed.R.Civ.P., a money judgment is enforced by a writ of execution. "The procedure on execution — and in proceedings supplementary to and in aid of judgment or execution — must accord with the procedure of the state where the court is located, but a federal statute governs to the extent it applies." Id. New York CPLR § 5225(b) governs the enforcement of a judgment as to property not in the possession of a judgment debtor. It states in part:
Id. Petitioners have come forward with evidence that respondent Bank of Tokyo is "a person in possession or custody of money" that belongs to the Iran Entities, a fact that Bank of Tokyo does not dispute. The named judgment debtors are the Islamic Republic of Iran, the Iranian Ministry of Information and Security, and the Iranian Islamic Revolution Guard Corps, and petitioners have come forward with evidence that the Iran Entities function as instrumentalities of the Islamic Republic of Iran. Pursuant to section 201(a) of the TRIA, as instrumentalities of the Islamic Republic of Iran, "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." Note, 28 U.S.C. § 1610. Under CPLR § 5225(b), "the judgment debtor is entitled to the possession of such property...."
Based on the foregoing, this Court concludes that the petitioners have established their entitlement to an order attaching the Iran Entities' funds that are possessed by the respondents and that they have satisfied the procedure set forth by New York CPLR § 5225(b).
While the respondent does not oppose the petitioners' motion, it notes concerns that OFAC must issue a license specific to the blocked assets before they can be made available for attachment. (Response Mem. at 2-3.) It states that if it were to turn over the funds without an OFAC license, it could be subject to civil and criminal penalties, (Response Mem. at 3.) The IEEPA sets forth civil and criminal penalties for violating the statute and any related license, order, regulation or prohibition. 50 U.S.C. § 1705. As respondent notes, the Department of Treasury also has stated on its website that "[a] license is an authorization from OFAC to engage in a transaction that otherwise would be prohibited."
At the invitation of the Court and in response to the current motion, the United States submitted a Statement of Interest pursuant to 28 U.S.C. § 517. The Statement concludes that "in the event a court determines that blocked assets are subject to TRIA, those funds may be distributed without a license from OFAC." (Statement of Interest at 3.) The Statement attaches a January 6, 2006 letter addressed to Judge Marrero in Weininger v. Castro, which asserted in identical terms that if the TRIA applied to the underlying funds, the funds can be distributed without a license from OFAC. (Statement of Interest Ex. E.) See also Weininger v. Castro, 462 F.Supp.2d 457, 499 (S.D.N.Y.2006) (quoting same). Petitioners also state that they have kept OFAC informed of this litigation
Following the submissions by the government and the petitioners, Bank of Tokyo now "accepts the representations of counsel for the Petitioners about its communications with OFAC and accepts the Government's stated position that a turnover order of this Court would be sufficient" to permit Bank of Tokyo "to disburse the Blocked Assets without the need for a separate OFAC license." (Response to Statement of Interest ¶ 3.)
This Court is aware of no contrary authority that would require an OFAC license in this instance. It accepts the Statement of Interest's assertion that no OFAC license is required.
The petitioners' motion for summary judgment is GRANTED. (Docket #36.) The Clerk is directed to terminate the motion.
Petitioners are directed to submit a proposed order, on notice to the respondent, within 14 days of the date of this Memorandum and Order.
SO ORDERED.
