Transamerica Life Insurance Company v. Yousef Rabadi et al

Filing 178

ORDER re Cross-Defendants Lysaght Law Group LLP and Brian C. Lysaght's Motion to Amend or Vacate Judgment Under Federal Rules of Civil Procedure 59(e) and 60(b) 166 by Judge Ronald S.W. Lew. The Court DENIES Cross-Defendants' Motion. As mentioned in the Court's Order granting Cross-Defendants' Ex Parte Application, ECF No. 165 at 6:6-11, now that the Court has ruled on their post-judgment motions, Cross-Defendants shall post a supersedeas bond should they seek a stay of disbursement of the interpled funds pending the current Ninth Circuit appeal. (jre) cc: FISCAL and Costs clerks via email by CRD on 7/26/2017 (jre).

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1 2 3 4 5 UNITED STATES DISTRICT COURT 6 CENTRAL DISTRICT OF CALIFORNIA 7 8 9 TRANSAMERICA LIFE INSURANCE ) ) COMPANY, ) 10 ) 11 Plaintiff-in-Interpleader, ) ) ) 12 v. ) ) 13 ) YOUSEF RABADI, INTESAR ) 14 ALTURK, BILL BILTAGI, LYSAGHT LAW GROUP LLP, and ) ) 15 DOES 1 through 10, ) ) 16 Defendants-in-Interpleader. ) ) 17 ) ) 18 YOUSEF RABADI, INTESAR ) ALTURK, and BILL BILTAGI, ) 19 ) ) 20 Cross-Claimants, ) ) 21 v. ) ) 22 ) LYSAGHT LAW GROUP LLP and ) 23 BRIAN C. LYSAGHT, ) ) 24 Cross-Defendants. ) 25 26 CV 15-07623-RSWL-Ex ORDER re CrossDefendants Lysaght Law Group LLP and Brian C. Lysaght’s Motion to Amend or Vacate Judgment Under Federal Rules of Civil Procedure 59(e) and 60(b) [166] Currently before the Court is Cross-Defendants 27 Lysaght Law Group (“LLG”) and Brian C. Lysaght’s 28 (“Lysaght”) (collectively, “Cross-Defendants”) Motion 1 1 to Amend or Vacate Judgment pursuant to Federal Rules 2 of Civil Procedure (“FRCP” or “Rule”) 59(e) and 3 60(b)(“Motion” or “Motion to Amend or Vacate Judgment”) 4 [166]. Having reviewed all papers submitted pertaining 5 to this Motion, the Court NOW FINDS AND RULES AS 6 FOLLOWS: the Court DENIES Cross-Defendants’ Motion 7 [166]. 8 I. BACKGROUND 9 A. 10 Factual Background This is a Rule 22 interpleader action concerning 11 the remaining 30% of death benefits, totaling $1.6 12 million, to a life insurance policy (the “Policy”). A 13 more detailed factual background of this Action is 14 provided in the Court’s April 18, 2017 Order Granting 15 Cross-Claimants’ Motions for Summary Judgment 16 (“Order”). Order re Cross-Cls.’ & Cross-Defs.’ Mots. 17 for Summ. J. (“Order”), ECF No. 152. 18 B. Procedural Background 19 On September 29, 2015, Transamerica Life Insurance 20 Company (“Transamerica”) filed a Complaint in 21 Interpleader (“Complaint” or “Complaint in 22 Interpleader”) under Rule 22, naming Cross-Claimants 23 Yousef Rabadi, Intesar Alturk, Bill Biltagi,1 and Cross24 Defendant LLG as Defendants in Interpleader [1]. 25 Transamerica could not ascertain who was entitled to 26 1 Rabadi, Intesar Alturk, and 27 BiltagiCollectively, Yousef “Cross-Claimants.” The CourtBill are referred to as will also refer to Cross-Claimants—when discussed individually–by 28 their last names (i.e. Rabadi, Alturk). 2 1 the remaining 30% of the Policy death benefits (“Policy 2 proceeds” or “interpled funds”). On January 13, 2016, 3 Defendants-in-Interpleader Rabadi, Alturk, and Biltagi 4 filed two Cross-Claims against Cross-Defendants for (1) 5 declaratory relief and (2) intentional interference 6 with contractual relations.2 7 Cross-Cl., ECF No. 22. The Court granted Cross-Claimants’ Motions for 8 Summary Judgment [99, 100] as to the Complaint in 9 Interpleader and the Cross-Claim for Declaratory 10 Relief, and on April 19, 2017 entered Judgment in favor 11 of Cross-Claimants and against Cross-Defendants 12 (“Judgment”), concluding that Cross-Claimants were 13 entitled to their pro-rata shares of the total 14 interpled funds. Judgment re Cross-Cls.’ & Cross- 15 Defs.’ Mots. for Summ. J. (“Judg.”) 2:7-18, ECF No. 16 153. The Court denied Cross-Defendants’ Motion for 17 Summary Judgment [118] as to its affirmative defenses 18 of unclean hands, estoppel, conspiracy, and unjust 19 enrichment and concluded that Cross-Defendants had not 20 demonstrated that their attorney’s lien (the “Lien”) 21 with their clients in a state court action (“State 22 Court Rabadis”) was valid and applicable to the 23 interpled funds. 24 Order 42:9-15. On April 20, 2017, Cross-Defendants appealed the 25 Court’s Judgment to the Ninth Circuit. 26 Appeal, ECF No. 154. See Ntc. of On May 5, 2017, the Court stayed 27 28 2 On May 17, 2016, the Court struck the intentional interference with contractual relations claim. ECF No. 59. 3 1 execution of the Judgment and disbursement of the 2 interpled funds pending its rulings on Cross3 Defendants’ post-judgment motions and pending Cross4 Defendants’ appeal. Order re Ex Parte App. (“Ex Parte 5 App.”) at 2:6-11, ECF No. 165. 6 On May 18, 2017, Cross-Defendants filed the instant 7 Motion to Amend or Vacate Judgment under Rules 59(e) 8 and 60(b) [166].3 Cross-Claimants Rabadi and Alturk 9 filed their Opposition on May 30, 2017 [167] and Cross10 Claimant Bill Biltagi filed his Opposition on the same 11 day [168]. He also joined in the other Cross- 12 Claimants’ Opposition [169]. On June 6, 2017, Cross- 13 Defendants filed a (1) Reply to Cross-Claimants re 14 Diversity of Citizenship and Subject Matter 15 Jurisdiction [170]; and (2) a Reply to Cross-Claimants’ 16 Oppositions [171], both seemingly in response to Cross17 Claimants’ separate Oppositions. The hearing was set 18 for June 20, 2017, and the Court took the matter under 19 3 A Rule 59(e) motion can be filed “no later than 28 days 20 after the entry of judgment.” The Court entered Judgment on 21 April 19, 2017, and Cross-Defendants filed their Motion on May 22 23 24 25 26 27 28 18, 2017, a day after the 28–day deadline of May 17, 2017 [153, 166]. Federal Rules of Appellate Procedure (“FRAP”) 4(a)(4)(B)(i) allow a district court to dispose of any motion listed in FRAP 4(a)(4)(A) even though a notice of appeal is pending, as is the case here. Rule 60 is listed as one of the post-judgment motions in FRAP 4(a)(4)(A) “if the motion is filed no later than 28 days after the judgment is entered” (emphasis added). Under FRAP Rules 4(a)(4)(A)-(B), then, the Motion on Rule 60(b) grounds would also appear untimely, as it was filed after the 28-day deadline. While the Court does not deny the Motion on lateness grounds alone, the Court admonishes CrossDefendants to respect deadlines in the Federal Rules, particularly when asking the Court to revisit its previous rulings. 4 1 submission on June 15, 2017 [174]. 2 Cross-Defendants made objections to the Alturk 3 Declaration and filed the Riggs Declaration in support 4 of their evidentiary objections on June 19, 2017. 5 Cross-Defs.’ Evid. Objs., ECF No. 175; Riggs Decl. re 6 Evid. Objs., ECF No. 176. They also filed a 7 Supplemental Memorandum regarding lack of Subject 8 Matter Jurisdiction on June 30, 2017.4 Suppl. Mem., ECF 9 No. 177. 10 II. DISCUSSION 11 A. Legal Standard 12 1. 13 14 Federal Rules of Civil Procedure 59(e) Motion to Alter or Amend the Judgment FRCP 59(e) gives the district courts power to alter 15 or amend a judgment by motion. Fed. R. Civ. P. 59(e). 16 However, the motion to alter or amend a judgment must 17 be filed no later than 28 days after the entry of the 18 judgment. Id. Courts enjoy “considerable discretion 19 in granting or denying [a motion to amend or alter a 20 judgment].” Allstate Ins. v. Herron, 634 F.3d 1101, 21 1111 (9th Cir. 2011)(internal quotation marks and 22 citation omitted). However, Rule 59(e) motions are not 23 24 25 26 27 28 4 The Court has reviewed Cross-Defendants’ Supplemental Memorandum and concludes that it does not offer newly decided cases that bear on the precise issues at hand; rather, it merely presents generally-known authority regarding subject matter jurisdiction that was available at the time the Motion and Reply were filed. Moreover, the Supplemental Memorandum is largely redundant of the rules and cases already relied upon in CrossDefendants’ Motion and Reply. See generally Mot. The Court thus declines to consider the Supplemental Memorandum. 5 1 vehicles for bringing before the court theories or 2 arguments not advanced earlier, nor may the motion 3 present evidence which was available but not offered at 4 the original motion or trial. U.S. S.E.C. v. Edwin- 5 Yoshihiro Fujinaga, No. 16-15623, 2017 WL 2465002, at 6 *1 (9th Cir. June 7, 2017)(unpublished). Rather, the 7 motion must rely on one of the following grounds: (1) 8 an intervening change in controlling law; (2) the 9 availability of new evidence; (3) the need to correct a 10 clear error of law or fact upon which the judgment 11 rests; or (4) the need to prevent manifest injustice. 12 Smith v. Clark County School Dist., 727 F.3d 950, 956 13 (9th Cir. 2013). Clear error occurs when the 14 “reviewing court on the entire record is left with the 15 definite and firm conviction that a mistake has been 16 committed.” Smith, 727 F.3d at 956 (quoting United 17 States v. U.S. Gypsum Co., 333 U.S. 364, 395 (1948)). 18 19 20 2. Federal Rules of Civil Procedure 60 Motion for Relief From a Judgment or Order Under Federal Rule of Civil Procedure 60(b), a 21 party may move to set aside a final judgment, order, or 22 proceeding for the following reasons: 23 24 25 (1) mistake, inadvertence, surprise or excusable neglect; (2) newly discovered evidence that, with reasonable 26 diligence, could not have been discovered in 27 time to move for a new trial under Rule 59(b); 28 (3) fraud, misrepresentation, or misconduct by an 6 1 opposing party; 2 (4) the judgment is void; 3 (5) the judgment has been satisfied, released or 4 discharged; it is based on an earlier judgment 5 that has been reversed or vacated; or applying 6 it prospectively is no longer equitable; or 7 (6) any other reason that justifies relief. 8 Fed. R. Civ. P. 60(b). 9 “A motion under Rule 60(b) must be made within a 10 reasonable time, and for reasons (1), (2), and (3) no 11 more than a year after the entry of the judgment or 12 order or the date of the proceeding.” Fed. R. Civ. P. 13 60(c). 14 B. Analysis 15 1. 16 17 Cross-Defendants’ Evidentiary Objections & Second Riggs Declaration On June 19, 2017—the day before the June 20, 2017 18 hearing and four days after the Court took the hearing 19 off-calendar and the matter under submission—Cross20 Defendants filed the following: (1) evidentiary 21 objections to the Alturk Declaration; and (2) a Riggs 22 Declaration in support of the evidentiary objections 23 [175, 176].5 24 25 26 27 28 5 Central District Local Rule 7-10 provides: “[a] moving party may, not later than fourteen (14) days before the date designated for the hearing of the motion, serve and file a reply memorandum, and declarations or other rebuttal evidence.” Both documents seemingly violate Local Rule 7-10 in that they could be sur-replies and declarations filed “later than 14 days” before the June 20, 2017 hearing. And Cross-Defendants seemingly use 7 1 Upon review of the objected-to evidence and Cross- 2 Defendants’ bases for their objections, Cross3 Defendants’ evidentiary objections are OVERRULED either 4 because the objections are “devoid of any specific 5 argument or analysis as to why any particular exhibit 6 or assertion in a declaration should be excluded,” 7 United States v. HVI Cat Canyon, Inc., 213 F. Supp. 3d 8 1249, 1257 (C.D. Cal. 2016), or because the Court does 9 not rely on the objected-to evidence. 10 2. 11 Cross-Defendants urge the Court to amend or vacate Motion to Amend or Vacate Judgment 12 its Judgment for the following reasons: (1) it lacks 13 subject matter jurisdiction over the Complaint and 14 Cross-Claim for declaratory judgment; (2) the summary 15 judgment standard was not followed; (3) the Policy was 16 illegal and even if it was not, Cross-Claimants made no 17 allegations that they were its lawful beneficiaries; 18 (4) Cross-Defendants were not required to file an 19 “independent action” to perfect their Lien under the 20 unique circumstances of this case; and (5) Lysaght was 21 not a proper party, thus, the Judgment against him as 22 points 23 the evidentiary objections as a vehicle for supplyingCross- and authorities better reserved for a Reply memorandum. 24 Claimants did not object to the evidentiary objections or the 25 26 27 28 Riggs Declaration, so the Court exercises its discretion to consider the documents. In any event, to the extent CrossDefendants’ evidentiary objections repeat the arguments already made in the Reply, the Court has already considered them in the instant Order. And so long as the statements and exhibits in the Riggs Declaration are not new evidence and arguments, the Court will address them as necessary in the Order. Provenz v. Miller, 102 F.3d 1478, 1483 (9th Cir. 1996). 8 1 an individual is void. Ntc. of Mot. to Am. or Vacate 2 J. i:10-17. 3 4 5 a. The Court has Subject Matter Jurisdiction over the Complaint in Interpleader Cross-Defendants argue that the Judgment should be 6 vacated because the Court never had diversity 7 jurisdiction over the Rule 22 interpleader action and 8 the cross-claim for declaratory judgment. 9 A Rule 22 interpleader action requires either 10 diversity jurisdiction or federal question 11 jurisdiction. For diversity jurisdiction, the amount- 12 in-controversy should exceed $75,000 and there should 13 be complete diversity between the plaintiff-stakeholder 14 and all claimant-defendants. The court looks to 15 diversity between the plaintiff-stakeholder and the 16 claimant-defendants, regardless whether claimant17 defendants are citizens of the same state. See 18 Travelers Ins. Co. v. First Nat’l Bank of Shreveport, 19 675 F.2d 633, n.9 (5th Cir. 1982) The burden of proof 20 is on the party arguing diversity of citizenship and 21 the party should plead and prove such facts under a 22 “preponderance of evidence” standard. Harris v. Rand, 23 682 F.3d 846, 851 (9th Cir. 2012). 24 From the face of the Complaint, it would appear 25 that complete diversity existed between Plaintiff in 26 Interpleader Transamerica, which is an Iowa 27 corporation, and the Defendants in Interpleader, who 28 were all allegedly California citizens. 9 See Compl. in 1 Interpleader (“Compl.”) ¶¶ 1-5. However, Cross- 2 Defendants argue that both Alturk and Biltagi’s 3 citizenship is unknown because in their Answer, they 4 denied the allegations that they are citizens of 5 California and Los Angeles residents. Cross-Defs.’ 6 Mot. to Am. or Vacate J. (“Mot.”) 4:25-26; Cross-Cls.’ 7 Ans. to Compl. in Interpleader ¶¶ 3, 4, ECF No. 12. 8 Because there are no allegations or proof establishing 9 Biltagi and Alturk’s citizenship, they are stateless 10 and thus diversity jurisdiction is not satisfied. The 11 Court addresses Biltagi and Alturk’s citizenship in 12 turn. 13 14 i. Bill Biltagi “In order to be a citizen of a State within the 15 meaning of the diversity statute, a natural person must 16 be both a citizen of the United States and be domiciled 17 within the State.” Newman-Green, Inc. v. Alfonzo- 18 Larrain, 490 U.S. 826, 828 (1989). Although he denied 19 the citizenship allegation in his Answer, in his 20 Opposition Biltagi explained that he did so because it 21 incorrectly stated that he is a Los Angeles resident 22 (Biltagi lives in Orange County). Biltagi’s Opp’n to 23 Mot. to Am. or Vacate J. (“Biltagi’s Opp’n”) 5:20-22. 24 Cross-Defendants argue that “[t]here is no allegation 25 that Biltagi is a U.S. citizen or domiciled in 26 California,” but he states in his Declaration that he 27 is a U.S. citizen and a citizen of California; 28 specifically, he resided in Orange County at the time 10 1 the Complaint was filed. Id. at ¶¶ 2, 3, ECF No. 168- 2 1; see also Beverly Reid O’Connell, et al., Cal. 3 Practice Guide: Federal Civil Procedure Before Trial ¶ 4 2:2031-32 (The Rutter Group 2017)(for domicile in a 5 particular state, it is proper form to allege one is a 6 “citizen” of a specific state). As evidence of same, 7 he attaches a copy of his current passport. 8 Decl. Ex. 1. Biltagi Based on the submitted evidence, Biltagi 9 establishes citizenship for diversity jurisdiction 10 purposes. 11 As a final matter, the Court disagrees with Cross- 12 Defendants that both Biltagi and Alturk’s Declarations 13 do not cure the pleadings’ failure to allege diversity 14 of citizenship. Cross-Defs.’ Evid. Objs. 6:11-12. 15 Because Alturk and Biltagi denied the diversity of 16 citizenship allegations in their Answer, and the 17 Complaint was not amended, Cross-Defendants argue that 18 the pleadings were fixed and devoid of diversity 19 jurisdiction from the beginning, and the instant 20 declarations alleging diversity of citizenship do not 21 change this. Id. at 7:11-22. Cross-Defendants 22 advocate for a rule that is unduly harsh. Were the 23 facts alleging diversity jurisdiction frozen at the 24 time of the Complaint and Answer, it would make little 25 sense to permit parties to dispute and prove subject 26 matter jurisdiction at any point throughout the 27 litigation, even for the first time on appeal. Broce 28 v. Arco Pipe Line Co., 28 F. App’x 653, 654 (9th Cir. 11 1 2002). Cross-Defendants’ argument also does not square 2 with 28 U.S.C. § 1653: “[d]efective allegations of 3 jurisdiction may be amended, upon terms, in the trial 4 or appellate courts.” See also Snell v. Cleveland, 5 Inc., 316 F.3d 822, 828 (9th Cir. 2002)(even after the 6 district court had entered judgment, the circuit court 7 could allow amendment of the complaint “to correct 8 defective jurisdictional allegations.”). 9 10 ii. Intesar Alturk The Complaint alleged that Alturk is a California 11 citizen and a resident of Los Angeles County. 12 3. Compl. ¶ Alturk denied this on the grounds that she is a 13 Jordanian citizen. Rabadi’s Opp’n to Mot. to Am. or 14 Vacate J. (“Rabadi’s Opp’n”) 6:6-7. Pursuant to 28 15 U.S.C. § 1332(a)(2), district courts have original 16 jurisdiction over actions between “citizens of a State 17 and citizens or subjects of a foreign state.” At first 18 blush, the Court would have alienage jurisdiction over 19 a citizen of a “foreign state” like Jordan. But Cross- 20 Defendants complicate matters through a litany of 21 theories that Alturk is “stateless” and thus destroys 22 diversity. 23 Cross-Defendants first argue that Alturk is 24 stateless and thus cannot sue or be sued in federal 25 court because she is a U.S. citizen but not domiciled 26 in a particular U.S. state; rather, she is a permanent 27 resident of Jordan, a foreign state. U.S. citizens 28 that are permanent residents of foreign states are 12 1 “stateless.” See Louisiana Mun. Police Emps. Ret. Sys. 2 v. Wynn, 829 F.3d 1048, 1056 (9th Cir. 2016). 3 For support, they attach (1) a W-9 form dated 4 October 29, 2007 with Alturk’s alleged social security 5 number written down; and (2) an internet search showing 6 that Alturk’s alleged social security number was issued 7 in 1994. Mot. Ex. 1; Riggs Decl. re Reply Ex. 1, ECF 8 No. 170-1; Ntc. of Errata, ECF No. 172.6 Cross- 9 Defendants suggest that the paperwork—of which the 10 authenticity is unclear and it is equally unclear 11 whether Alturk filled out the paperwork—shows Alturk is 12 a U.S. citizen. See Lysaght Decl. ¶ 2, ECF No. 166-1 13 (“[i]f she has [a social security number], is a U.S. 14 citizen and domiciled in Jordan, she is stateless.”) 15 Further, Alturk argued that she is a permanent resident 16 of Jordan: “[Alturk’s] domicile [is] in Jordan” and she 17 “has, for well over a decade resided in . . . Jordan.” 18 L.R. 37-1 Stip. Re Cross-Defs.’ Mot. for Order 19 Compelling Depo. 5:16-17, 7:8-9, ECF No. 88. Cross- 20 Defendants argue that Alturk is a U.S. citizen and a 21 permanent resident of Jordan, a foreign state, thus 22 rendering her “stateless” and destroying diversity of 23 24 25 26 27 28 6 They also attach an internet search showing that the social security number she allegedly used was never associated with anyone named Alturk, Altourk, or Hassan. Riggs Decl. re Evid. Objs. Ex. 4. Whether Cross-Defendants mean to suggest that the social security number is fraudulent is anyone’s guess, but the Court surmises Cross-Defendants present her alleged social security number in other exhibits to show she is a United States citizen. 13 1 citizenship. 2 Alturk is not both a U.S. citizen and a permanent 3 Jordanian resident—she is a Jordanian citizen. 4 she is not stateless. Thus, Cross-Defendants cite no 5 authority that suggests an application for a social 6 security number confers citizenship. Further, 7 noncitizens may receive a social security number. See 8 Social Security Numbers for Noncitizens, 9 (June 2016). 10 Moreover, the attached exhibit, a W-9 Request for 11 Taxpayer Identification Number and Certification Form, 12 can be completed by both U.S. citizens and resident 13 aliens. See Mot. Ex. 1; see also Taxation of U.S. 14 Resident Aliens, 15 international-taxpayers/taxation-of-resident-aliens 16 (Oct. 31, 2016). And her permanent resident card, 17 which expired in 2012—before the lawsuit was filed—does 18 not confer U.S. citizenship. Without more, the Court 19 cannot conclude that the W-9 form or the social 20 security number render Alturk a U.S. citizen. 21 Cross-Defendants’ second argument as to why Alturk 22 is “stateless” is two-fold: (1) Alturk is a Palestinian 23 citizen and because the United States does not 24 recognize Palestine as a sovereign state, Alturk is 25 “stateless” and cannot invoke alienage jurisdiction; 26 and (2) Alturk’s alleged Jordanian passport is not 27 actually a passport, but rather is a “travel document” 28 that Jordan issues to Palestinians to allow them to 14 1 travel. Mot. 6:23-24, 7:1-5; Cross-Defs.’ First Reply 2 re Mot. (“First Reply”) 8:12-17. 3 Cross-Defendants insist that Alturk is Palestinian. 4 They attach the Death Certificate of Albert Hreish Sr. 5 (“Hreish”), a defendant in an Orange County case in 6 which Alturk and her son, Abraham Khader (“Khader”), 7 were apparently co-defendants. Riggs Decl. re Mot. for 8 Summ. J. Ex. 1, ECF No. 121-1. The death certificate 9 provides that Hreish’s place of birth is Palestine. 10 Lysaght Decl. Ex. 3. Another attached exhibit is 11 Khader’s deposition from a state-court case. 12 Ex. 2. Id. at Per Cross-Defendants, Khader testified that 13 Alturk and Hreish were from the “same town.” Piecing 14 together this testimony and Hreish’s death certificate, 15 Alturk is from Palestine. Id. at ¶¶ 3, 4. This is 16 not an entirely accurate description of the testimony, 17 as per Cross-Defendants’ pincite, Khader testified that 18 Alturk and Hreish were “from the same city of Java 19 [Jaffa] on the coast of Israel;” Palestine is not 20 expressly mentioned. Id. at Ex. 2, 127:5-9. Cross- 21 Defendants nevertheless point out that Alturk’s 22 Jordanian passport provides that she was born in Jaffa 23 in 1935, and although Jaffa is present-day Israel, it 24 was not considered Jordan until 1946 and not considered 25 Israel until 1959; thus, Alturk was born Palestinian 26 and therefore stateless. First Reply 5:21-23. Cross- 27 Defendants also rely on statements apparently made by 28 the Illinois Jordanian consul, which are relayed in the 15 1 Riggs Declaration: “[the consul] stated that any person 2 born in Jaffa in 1935 was Palestinian.” Riggs Decl. re 3 Reply ¶ 2, ECF No. 170. 4 Some of the caselaw Cross-Defendants provide 5 suggests that the United States does not recognize 6 Palestine as a sovereign state. In Klausner v. Levy, 7 83 F. Supp. 599 (E.D. Va. 1949), the court concluded 8 that the plaintiff, who alleged he was a Palestinian 9 citizen when the complaint was filed, was not a citizen 10 of a “foreign state” under section 1332(a)(2) because 11 Palestine was under the British Mandate when the 12 complaint was filed and did not earn recognition as a 13 state until later. And in Abu-Zeineh v. Federal Labs., 14 Inc., 975 F. Supp. 774, 777-78 (W.D. Pa. 1994), the 15 court found alienage jurisdiction did not exist. 16 Plaintiff’s counsel asked the State Department whether 17 “the Palestinian residents of the West Bank [were] 18 Jordanian citizens after King Husseins’ July 31, 1988 19 proclamation, which unilaterally severed Jordan’s legal 20 and administrative ties with those Palestinians” and 21 thus whether the West Bank-based plaintiffs were 22 citizens of Jordan when the complaint was filed in 23 December 1991. After receiving an inconclusive answer 24 from the State Department, the court relied on King 25 Hussein’s 1988 proclamation that any person residing in 26 the West Bank before July 31, 1988 would be a 27 Palestinian, not a Jordanian citizen. 28 Id. at 778. Cross-Defendants’ evidence does not convince the 16 1 Court that Alturk is Palestinian. First, unlike the 2 plaintiffs in Klausner and Abu-Zeineh, Alturk did not 3 allege that she was a Palestinian citizen or a West 4 Bank citizen at the time the lawsuit commenced. Here, 5 Alturk alleges that she was domiciled in Jordan when 6 the action commenced in September 2015 and she proffers 7 her passport, issued in October 2012, which at least 8 under the preponderance of evidence standard suggests 9 that she was a Jordanian citizen at the time the 10 lawsuit was filed. 11 1. Alturk Decl. Exs. B-D, ECF No. 167- Cross-Defendants baldly argue that anyone born in 12 Jaffa in 1935 was Palestinian, Riggs Decl. re Reply ¶ 13 2, based on an alleged conversation Cross-Defendants’ 14 counsel, Ms. Riggs, had with the Illinois Jordanian 15 consul. They add that she is a Palestinian refugee 16 from the 1948 civil war and thus remains a Palestinian 17 to this day according to the United Nations.7 18 Defs.’ Evid Objs. 8:15-9:10. Cross- But Alturk’s “place of 19 birth, [] is not determinative on the question of her 20 citizenship for purposes of diversity jurisdiction.” 21 Lyons v. O’Quinn, 607 F. App’x 931, 934 (11th Cir. 22 2015). Second, setting aside potential hearsay 23 problems with the Jordanian consul’s statements, Cross24 Defendants’ vague reference to a United Nations’s 25 purported policy and the lone statement from the 26 27 28 7 Cross-Defendants do not provide the Court a cite to some United Nations publication or website material bolstering this claim. 17 1 Jordanian consul are unsupported and do not 2 conclusively establish that Alturk is Palestinian. 3 Third, cobbling together Khader’s deposition and 4 Hreish’s death certificate requires several inferential 5 leaps that are not based in any evidence or legal 6 theories before the Court. 7 Alturk has demonstrated by a preponderance of the 8 evidence that she was a Jordanian citizen at the time 9 this Action was instituted and can invoke alienage 10 jurisdiction. Cross-Defendants’ fixation on Jaffa’s 11 sovereign status in 1935 and Alturk’s birth there do 12 not make it clear that in September 2015, when the 13 Complaint was filed, that she was Palestinian. 14 Diversity of citizenship depends on facts at the time 15 the lawsuit was filed. Grupo Dataflux v. Atlas Global 16 Grp., L.P., 541 U.S. 567, 570 (2004). Although Alturk 17 apparently was once a permanent U.S. resident, this 18 expired in September 2012 before the Complaint was 19 filed. 20 U.S. Currently, she only has a visitor’s Visa to the Alturk Decl. ¶ 4, Ex. C. She attaches a copy of 21 her passport from the Kingdom of Jordan as proof of her 22 Jordanian citizenship. Id. at ¶ 2, Ex. A. She also 23 attaches an identification card indicating her 24 permanent residence in Amman, Jordan and listing her 25 specific address. 26 Id. at ¶ 3, Ex. B. Cross-Defendants’ second argument is that Alturk is 27 not a Jordanian citizen because her purported Jordanian 28 passport is actually a “travel document” that Jordan 18 1 issues to Palestinians to facilitate their travel. 2 First Reply 8:12-14. For support, Cross-Defendants 3 attach the Riggs Declaration, in which Cross4 Defendants’ counsel avers that the Jordanian consul in 5 Illinois stated that Jordan issues passports to 6 Palestinians residing in Jordan, but possession of a 7 Jordanian passport is not necessarily evidence of 8 Jordanian citizenship and the absence of a “national 9 number” on the passport indicates the individual is a 10 Palestinian. See Riggs Decl. re Reply ¶ 2. Cross- 11 Defendants point out that the “national number code” on 12 Alturk’s passport has been redacted, thus raising 13 doubts as to whether it is truly a Jordanian passport. 14 Id. But the Jordanian consul also stated that even if 15 Jordan issues a national number to Palestinians living 16 in Jordan, such as when they own property in Jordan, 17 this does not necessarily render them a Jordanian 18 citizen. 19 Id. In Zahren v. Gonzales, 487 F.3d 1039, 1039 (7th 20 Cir. 2007), on rehearing Zahren v. Holder, 637 F.3d 698 21 (7th Cir. 2011), the plaintiff was born in 1971 in the 22 West Bank (in Hebron, specifically) and lived there for 23 20 years, until approximately 1991. In 1983, after 24 power in the West Bank shifted from Jordan to Israel, 25 Jordan started giving Palestinians remaining in the 26 West Bank temporary Jordanian “passports” that did not 27 confer citizenship but were “travel documents.” 28 1041. Again in 1988, after Jordan renounced its 19 Id. at 1 control to the West Bank, “Palestinians residing in the 2 West Bank [could] obtain 5-year Jordanian travel 3 passports that confer no citizenship.” Id. at 1042. 4 The circuit court upheld the immigration judge’s choice 5 to remove plaintiff to Jordan, but indicated there were 6 questions whether he was Palestinian. 7 Id. at 1041. First, while Alturk’s passport is set to expire in 8 October 2017, five years after it was issued in October 9 2012, this does not conclusively establish that she is 10 a Palestinian citizen with a “temporary” Jordanian 11 passport. Unlike the plaintiff in Zahren, who 12 admittedly lived in the West Bank for 20 years—and 13 alleged in an affidavit that he was a Palestinian and 14 never once referred to Jordan—including in 1983 and 15 1988, times during which Palestinians received 16 temporary Jordanian “passports” that did not confer 17 citizenship, the facts do not place Alturk as a West 18 Bank/Palestinian citizen during the relevant time 19 window for her passport to qualify as a temporary 20 “travel document.” 21 Second, Cross-Defendants do not indicate whether 22 bona fide Jordanian citizens may receive the “travel 23 document,” whether it is exclusively meant for 24 Palestinians, or even whether citizens of other foreign 25 states might possess such a document. All the Court is 26 aware of is that Alturk was born in Jaffa in 1935 and 27 presently lives in Amman. Alturk Decl. ¶ 3, Exs. A, B. 28 It is difficult to account for Alturk’s status as a 20 1 Palestinian leading up to 2015, but Cross-Defendants 2 would have the Court believe that she was born a 3 Palestinian and remained one indefinitely after the 4 1948 war. And the focus on the alleged lack of a 5 national number is misplaced, as the Jordanian consul 6 stated that even non-Jordanians can have a national 7 number. Alturk’s passport, Jordanian identification 8 card, and allegations as to her permanent residence in 9 Jordan throughout all times relevant to the Complaint 10 show, under the preponderance of evidence standard, 11 that Alturk is a Jordanian citizen. Cross-Defendants’ 12 evidence that Alturk is Palestinian is conjectural, and 13 because there are too many gaps in Cross-Defendants’ 14 reasoning and too many unsupported inferences the Court 15 would need to make to sign on to their logic, the Court 16 disagrees that she is a Palestinian with a Palestinian 17 “travel document.” 18 The Court thus concludes that Defendants in 19 Interpleader Biltagi, Rabadi, and LLG are California 20 citizens, Alturk is a Jordanian citizen, and Plaintiff 21 in Interpleader Transamerica is an Iowa corporation. 22 The amount-in-controversy easily exceeds $75,000, as 23 $1.5 million interpled funds are at stake. Thus, the 24 Rule 22 interpleader diversity jurisdiction is 25 satisfied and the Court has subject matter jurisdiction 26 over the Complaint in Interpleader. 27 /// 28 b. The Court has Subject Matter Jurisdiction 21 1 2 over the Cross-Claim Cross-Claimants filed a Cross-Claim against Cross- 3 Defendants, seeking declaratory relief that Cross4 Defendants did not have an enforceable Lien for 5 attorneys’ fees against Cross-Claimants or the Policy 6 proceeds. 7 Cross-Cl. ¶ 9, ECF No. 22. The Court has subject matter jurisdiction over the 8 Cross-Claim against LLG and Lysaght. Pursuant to FRCP 9 13(g), a pleading “may state as a cross-claim any claim 10 by one party against a co-party if the claim arises out 11 of the transaction or occurrence that is the subject 12 matter of the original action.” Here, the declaratory 13 relief claim regarding the enforcement of the Lien 14 arose out of the “transaction or occurrence” underlying 15 the Complaint; that is, the enforceability of the Lien 16 would have had a bearing on who was entitled to the 17 interpled funds amongst Rabadi, Biltagi, Alturk, and 18 LLG, the Defendants in Interpleader. Because the 19 declaratory relief claim arises out of the “same 20 transaction or occurrence” as the Complaint, the Court 21 has supplemental jurisdiction over it. 22 13(g); see 28 U.S.C. § 1367(a). Fed. R. Civ. P. That Cross-Claimants 23 Rabadi and Biltagi are California citizens and Cross24 Defendants LLG and Lysaght are too does not disturb the 25 Court’s jurisdiction so long as it has supplemental 26 jurisdiction. Cam-Ful Indus. Inc. v. Fidelity & 27 Deposit Co. of Maryland, 922 F.2d 156 (2d Cir. 28 1991)(“[a] cross-claim does not need an independent 22 1 basis for jurisdiction so long as it satisfies the test 2 for ancillary jurisdiction.”). 3 Cross-Defendants aver that Lysaght, an individual, 4 could not be added as a cross-defendant in the cross5 claim pursuant to FRCP 13 and that he is not an 6 indispensable or even a proper party because he “has 7 never made a claim individually to any part of the 8 proceeds and has never filed a lien individually” and 9 he “is so irrelevant to the main interpleader complaint 10 that [he was] not named as party thereto.” 11 11. Mot. 10:10- Per Rule 13(h), Rules 19 and 20 “govern the 12 addition of a person as a party to counterclaim or 13 cross-claim.” 14 parties. Rule 20 deals with permissive joinder of “Persons . . . may be joined” if “any right 15 to relief is asserted against them jointly, severally, 16 or in the alternative with respect to or arising out of 17 the same transaction, occurrence, or series of 18 transactions or occurrences . . . .” and “any question 19 of law or fact common to all defendants will arise in 20 the action.” 21 Fed. R. Civ. P. 20(2)(A)-(B). Although the parties agree that LLG, rather than 22 Lysaght as an individual, likely held the Lien at issue 23 in the Cross-Claim, Rule 20(2) suggests that as 24 managing partner and acting attorney for LLG, Lysaght 25 was at least a party that could have been permissibly 26 joined. Here, the addition of Lysaght satisfied Rule 27 20(2)(A)-(B). Cross-Claimants’ Cross-Claim against LLG 28 and Lysaght “arose out of the same series of 23 1 occurrences”—the Lien that they claimed applied to the 2 interpled funds. See Orlando Decl. Ex. 3 (speaking on 3 behalf of LLG, Lysaght advised that he “expect[ed] 4 [the] [L]ien to be honored with respect to any proceeds 5 allegedly due to Victoria Rabadi.”). And the cross- 6 claim against LLG and Lysaght raised questions of fact 7 or law to both: that is, facts regarding whether Cross8 Defendants’ Lien is enforceable against Cross9 Claimants’ policy would help resolve to whom the Court 10 should distribute the interpled funds. Finally, adding 11 Lysaght was done to possibly prevent a multiplicity of 12 suits in the future, should Lysaght have his own claims 13 against Cross-Claimants. 14 Pursuant to Rules 13(g), 13(h), and 20, Cross- 15 Claimants could join Lysaght and the Court maintains 16 supplemental jurisdiction over the Cross-Claim for 17 declaratory relief. Satisfied it has subject matter 18 jurisdiction over the Complaint in Interpleader and the 19 Cross-Claim, the Court now turns to Cross-Defendants’ 20 arguments regarding the substantive merits of the 21 Court’s Order. 22 c. 23 24 Whether the Court Misapprehended CrossDefendants as Beneficiaries to the Policy Cross-Defendants argue that the Court’s Order 25 assumed the “myth” that Cross-Defendants were using 26 their affirmative defenses to “shoehorn [their] way 27 into being recognized as a beneficiary” to the Policy 28 proceeds. Cross-Defs.’ Second Reply re Mot. (“Second 24 1 Reply”) 3:15-19. They never claimed to be a 2 beneficiary under the Policy. 3 The evidence belies this argument about whether 4 Cross-Defendants were “beneficiaries” under the Policy, 5 or at least whether they were seeking entitlement to 6 the Policy proceeds. In August 2015, Cross-Defendants 7 sent Transamerica a letter stating that they 8 “expect[ed] [the] [L]ien to be honored with respect to 9 any proceeds allegedly due to Victoria Rabadi,” that 10 “[the] [L]ien is intended to reach this Transamerica 11 policy,” and advising that Transamerica could “litigate 12 [Cross-Defendants’] entitlement to 30%” of the Policy. 13 Orlando Decl. Ex. 3, at 12. Per Lysaght, he was merely 14 responding to Transamerica after he had “dealt on and 15 off with [Transamerica’s attorney] for years in 16 connection with the underlying state court case,” and 17 he knew nothing of the Policy. Second Reply 2:11-12. 18 In their Answer to the Complaint in Interpleader, 19 Cross-Defendants admitted that their “[L]ien is valid 20 and enforceable and [they] are entitled to [] 100% of 21 the remaining policy proceeds.” 22 Compl. ¶ 21, ECF No. 15. Cross-Defs.’ Ans. to And in their Answer to the 23 Cross-Claim, they averred that they were “the only 24 claimant in this case who has made or can legally make 25 [a] lawful claim to the [P]olicy proceeds.” Cross- 26 Defs.’ Ans. to Cross-Cl. ¶ 9, ECF No. 66. 27 Regardless what Cross-Defendants knew at the time, 28 Transamerica filed the Complaint on the belief that 25 1 Cross-Defendants were disputing their entitlement to 2 the remaining 30% of Policy proceeds. Compl. ¶ 18. 3 Although Cross-Defendants argue that they were not 4 beneficiaries and “ha[ve] never done anything except 5 get sued,” second reply 3:20-21, why did Cross6 Defendants not seek to extricate themselves from the 7 Complaint or subsequently the Cross-Claim, instead 8 choosing to assert affirmative defenses and seeking to 9 have the Court reduce or bar Cross-Claimants’ 10 entitlement to the funds? Putting aside the semantics 11 of whether or not they are claiming they are the Policy 12 “beneficiaries,” Cross-Defendants were at least seeking 13 a stake in the proceeds. To change tack now—and argue 14 that in the Motion for Summary Judgment they were only 15 burdened with showing a jury should decide their 16 affirmative defenses—is disingenuous. 17 Cross-Defendants argue that rather than trying to 18 claim beneficiary status, they were using their 19 affirmative defenses to diminish Cross-Claimants’ claim 20 to the Policy proceeds. Cross-Defendants seize on the 21 Court’s statement in its March 2016 Order re Cross22 Claimants’ Motion to Strike Affirmative Defenses in 23 Cross-Defendants’ Answer to the Complaint: “[Cross24 Defendants’] affirmative defenses directly impact this 25 Court’s determination of the proper recipient of the 26 proceeds. If [Cross-Defendants] prevail on [their] 27 affirmative defenses, [Cross-Claimants’] claim to the 28 Policy proceeds will be reduced or barred.” 26 ECF No. 1 51, at 5:8-13 (emphasis added). The Court’s March 2016 2 Order said it would possibly reduce Cross-Claimants’ 3 claim to the Policy proceeds if Cross-Defendants’ 4 affirmative defenses succeeded. The Court concluded 5 they did not in its Summary Judgment Order. The Court 6 reasoned that the facts were too sparse to conclude 7 there were no genuine disputes of material fact whether 8 the Policy was illegal, and the Policy was not 9 necessarily a STOLI policy as it was distinguishable 10 from some of the cases Cross-Defendants cited. Cross- 11 Defs.’ Mot. for Summ. J. 27:11-16, 30:7-9, ECF No. 118. 12 And while the Court acknowledged that the conspiracy 13 claim, in isolation, may have had legs, Cross14 Defendants provided little guidance as to why the Court 15 could first bar Cross-Claimants’ recovery of the Policy 16 proceeds and then “award [Cross-Defendants’] all funds 17 deposited by [Transamerica].” Cross-Defs.’ Proposed J. 18 to Mot. for Summ. J. 1:12-14, ECF No. 118-2. 19 In its Summary Judgment Order, the Court 20 acknowledged that even if the validity of Cross21 Defendants’ affirmative defenses could feasibly bar or 22 reduce Cross-Claimants’ claims to the Policy (which 23 they did not), “dispute[s] remained” as to whether the 24 interpled funds should go to Cross-Defendants. It is 25 curious that in one breath Cross-Defendants argue that 26 they are mere “officers of the court under an 27 obligation” to shine a light on the “criminal 28 enterprise,”—that is, only pursuing their affirmative 27 1 defenses—but in another breath Cross-Defendants ask the 2 Court to conclude Alturk lacks alienage jurisdiction, 3 dismiss her from the case, and then “[a]ward 44% of the 4 interpled funds to Lysaght Law Group LLP.” 5 6:21-27. Suppl. Mem. Whether or not Cross-Defendants want to label 6 themselves beneficiaries, they still do not show how or 7 why they are entitled to the interpled funds after 8 Cross-Claimants’ portion is barred or reduced. 9 10 d. Policy Illegality and Lien Enforceability Cross-Defendants aver that it was improper for the 11 Court to presume it needed to confirm that the Lien 12 applied to the Policy proceeds and that the Lien was 13 established through an “independent action.” 14 Reply 1:12-14. Second Cross-Defendants’ affirmative defenses 15 and participation in the interpleader action are 16 unaffected by whether it has established the Lien’s 17 validity; Cross-Defendants did not need to sue anyone 18 regarding their Lien to participate in this Action. 19 Id. at 5:25-27. By participating in this litigation, 20 all they were trying to show were “sufficient facts to 21 get to the jury that the [State Court Rabadis] made a 22 deal to get paid under the table from a common pool of 23 illicit proceeds of which these death benefits were a 24 party.” Mot. 9:10-13. 25 their burden. Cross-Defendants did not meet Moreover, they repeatedly entwined their 26 Lien with the Policy proceeds and the alleged Khader 27 “conspiracy,” arguing that the State Court Rabadis were 28 part of the same conspiracy that was a “backdoor 28 1 effort[] to avoid [Cross-Defendants’] contingency fee” 2 or that the State Court Rabadis entered the Khader 3 conspiracy to cheat Cross-Defendants out of the fees 4 they sought to salvage through the Lien. 5 Mot for Summ J. 24:10-21, ECF No. 118. Cross-Defs.’ Even taking 6 away the issue of the Lien, Cross-Defendants do not 7 sketch out how a jury would determine the State Court 8 Rabadis were paid the unlawful Policy proceeds and then 9 conclude Cross-Defendants were entitled to the proceeds 10 from said illegal Policy. 11 The Court finds itself rehashing its analysis 12 already made in the Order.8 Because a Rule 59(e) or 13 Rule 60(b) motion “may not be used to re-litigate old 14 matters, or to raise arguments or present evidence that 15 could have been raised prior to the entry of judgment,” 16 and Cross-Defendants’ arguments do not show newly 17 discovered evidence, an intervening change in 18 controlling law, or manifest errors of law or fact, the 19 Court declines to grant Cross-Defendants’ Motion on the 20 basis of this argument. Exxon Shipping Co. v. Baker, 21 554 U.S. 471, 485 n.5 (2008). 22 Because the Court properly had subject matter 23 jurisdiction over the Complaint in Interpleader and the 24 25 26 27 28 8 Cross-Defendants also revisit their arguments about the Policy illegality, which are largely repetitive of those raised in their Motion for Summary Judgment. Compare Second Reply 7:1015 (“any policy lacking an insurable interest . . . is void ab initio”), with Reply re Cross-Defs.’ Mot. for Summ. J. 8:1-9:28 (STOLI policies that lack an insurable interest are void ab initio). 29 1 Cross-Claim, and because Cross-Defendants have not 2 demonstrated unusual circumstances warranting Rule 3 59(e) and Rule 60(b)’s extraordinary relief, the Court 4 denies Cross-Defendants’ Motion. 5 III. CONCLUSION 6 Based on the foregoing, the Court DENIES Cross- 7 Defendants’ Motion [166]. As mentioned in the Court’s 8 Order granting Cross-Defendants’ Ex Parte Application, 9 ECF No. 165 at 6:6-11, now that the Court has ruled on 10 their post-judgment motions, Cross-Defendants shall 11 post a supersedeas bond should they seek a stay of 12 disbursement of the interpled funds pending the current 13 Ninth Circuit appeal. IT IS SO ORDERED. 14 15 DATED: July 24, 2017 S/ 16 HONORABLE RONALD S.W. LEW Senior U.S. District Judge 17 18 CC: FISCAL, BILL/COSTS 19 20 21 22 23 24 25 26 27 28 30

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