United States of America v. All funds on deposit with R.J. O'Brien & Associates, held in the name of Bridge Investment, S.L., bearing account numbers XXX-X3931 and XXX-X1784, maintained at Harris Bank account number XXX-171

Filing 155

MEMORANDUM Opinion and Order written by the Honorable Matthew F. Kennelly on 10/9/2013. For the foregoing reasons, the Court grants the claimant insurance companies' motions for summary judgment [docket no. 127 in Case No. 11 C 4175; docket no. 55 in Case No. 12 C 1346] and denies the government's motion for summary judgment [docket no. 134 in Case No. 11 C 4175]. The Clerk is directed to terminate both cases. Claimants are directed to provide a proposed form of judgment for each cas e by no later than October 31, 2013, after first providing a draft to the government's counsel. The Court notes, in this regard, that it is setting a longer-than-usual deadline due to the current government shutdown (though the government's attorney, who is generally assigned to the criminal side of the United States Attorney's Office, appears to still be on the job). The Court also notes in that regard that because no judgment or final orderhas yet been entered, the time to appeal has not yet begun to run. The case is set for a status hearing on November 5, 2013 at 9:30 a.m. Civil case terminated. Mailed notice.(pjg, )

IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF ILLINOIS
EASTERN DIVISION

UNITED STATES OF AMERICA,

)
)
Plaintiff,
)
)
vs.
)
)
ALL FUNDS ON DEPOSIT WITH R.J.
)
O'BRIEN & ASSOCIATES, HELD IN THE
)
NAME OF BRIDGE INVESTMENT, S.L.,
)
BEARING ACCOUNT NUMBERS XXX)
X3931 AND XXX-X1784, MAINTAINED AT
)
HARRIS BANK, ACCOUNT NUMBER XXX- )
171-6,
)
)
Defendant.
)
)
____________________________________ )
)
ART INSURANCE COMPANY, et al.,
)
)
Plaintiffs,
)
)
v.
)
)
AL QAEDA,
)
)
Defendant.
)

Case No. 11 C 4175

Case No. 12 C 1346

MEMORANDUM OPINION AND ORDER
MATTHEW F. KENNELLY, District Judge:
The United States has filed an in rem action (Case No. 11 C 4175) seeking
forfeiture of about $6.7 million held in futures trading accounts. The money, the parties
agree, belongs to an affiliate of the Al Qaeda terrorist organization. Several insurance
companies that paid billions of dollars on their insureds' property damage claims arising

from the September 11, 2001 terrorist attacks have filed verified claims to the funds and
answers to the government's in rem complaint.
On March 27, 2012, the Court granted the government's motions to strike the
insurance companies' claims and answers and denied a motion to intervene by
thousands of personal injury claimants. United States v. All Funds on Deposit with R.J.
O'Brien & Assocs., No. 11 C 4175, 2012 WL 1032904, at *1 (N.D. Ill. Mar. 27, 2012)
(R.J. O'Brien I). On September 25, 2012, the Court denied the government's motion to
quash a writ of execution and a citation to discover assets issued in Case No. 12 C
1346 and granted claimants' motion to amend their claims in Case No. 11 C 4175.
United States v. All Funds on Deposit with R.J. O'Brien & Assocs., 892 F. Supp. 2d
1038 (N.D. Ill. 2012) (R.J. O'Brien II). Finally, on December 10, 2012, the Court denied
the government's motion under 28 U.S.C. § 1292(b) to certify for interlocutory appeal
certain rulings the Court made in the September 25, 2012 order. United States v. All
Funds on Deposit with R.J. O'Brien & Assocs., Nos. 11 C 4175 & 12 C 1346, slip op. at
2–7 (N.D. Ill. Dec. 10, 2012) (R.J. O'Brien III).
Both the insurance company claimants and the United States have now moved
for summary judgment. The government argues that the claimants lack standing to
assert their claims to the funds and that their claims violate the government's sovereign
immunity. The claimants contend that the Terrorism Risk Insurance Act of 2002 (TRIA),
116 Stat. 2322, 2337 (codified at 28 U.S.C. § 1610 note) authorizes their claim to the
funds, in that it allows them priority over a government forfeiture action. For the reasons
stated below, the Court denies the government's motion for summary judgment and
grants the claimants' motion for summary judgment.

2

Background
After the terrorist attacks of September 11, 2001, insurance companies paid out
billions of dollars in coverage to customers who suffered property and business losses
in the attacks and their aftermath. In September 2003, several of these companies filed
suit against Al Qaeda, seeking reimbursement for their losses. In September 2005, the
companies moved for default judgment on their claims, which were consolidated in the
District Court for the Southern District of New York as In re Terrorist Attacks, 03-MDL1570 (S.D.N.Y. Mar. 10, 2003). The companies received an order of default in April
2006, but the court did not issue an order specifying a damages amount until December
2011. That amount was $9,351,247,965.99, which included compensatory damages for
the companies over $2.5 billion. The court entered a final judgment in January 2012,
and the companies registered the judgment in this district in February 2012. The
registration-of-judgment matter was randomly assigned to Judge Gettleman. See
Registration of Judgment Pursuant to 28 U.S.C. § 1963, Art Ins. Co. v. Al Qaeda, No.
12 C 1346 (N.D. Ill. Feb. 27, 2012).
Elsewhere, in 2005, an individual named Mohammad Qasim al Ghamdi took
control of a commodities futures trading account at R.J. O'Brien & Associates (RJO), a
Chicago company. The account had been opened two years earlier in the name of
Bridge Investment, S.L. By September 2005, the account contained about $26.7
million, but that amount fell to $6.7 million by May 2006. Although Al Ghamdi controlled
the account, the funds belonged to Muhammad Abdallah Abdan Al Ghamdi, a member
of Al Qaeda also known as Abu Al Tayyeb. As the parties now agree, Al Qaeda had a

3

beneficial interest in these funds. Bridge Investments opened a second account at RJO
in November 2006.
In June 2006, shortly after the funds had dwindled to the $6.7 million mark, Saudi
Arabian authorities arrested Al Tayyeb. It is undisputed that he was considering
terrorist attacks against the Saudi and American targets. In June 2007, the United
States Department of the Treasury's Office of Foreign Assets Control (OFAC) blocked
the two RJO accounts in question. OFAC's authority derived from Executive Order
13224 of September 23, 2011, 31 C.F.R. 594 (the Global Terrorism Sanctions
Regulations), and 50 U.S.C. § 1701, also known as the International Emergency
Economic Powers Act (IEEPA). Four years later, on June 19, 2011, the United States
filed a verified complaint in this Court for forfeiture of the funds, an action in rem under
18 U.S.C. § 981(a)(1)(G)(i) and (iv), the civil forfeiture statute.
On June 21, 2011, the Chicago Tribune published an article about the
government's decision to block the RJO/Al Ghamdi accounts. The article served as the
first notice about the funds for the insurance companies that had obtained the order of
default against Al Qaeda in the Southern District of New York. In August 2011, the
insurance companies filed verified claims to the RJO/Al Ghamdi funds in the
government's forfeiture action. In December, the government moved to strike the
claims and answers of the insurance company claimants, and the claimants moved to
amend them. At the same time, several thousand individuals asserting personal injury
and wrongful death claims arising from the September 11, 2001 attacks moved to
intervene in the case.

4

This Court's order of March 27, 2012 granted the government's motions to strike
and denied the personal injury claimants' motion to intervene. The Court did not decide
whether the insurance company claimants had constitutional standing, but it granted the
government's motion to strike and denied the insurance claimants' motion to amend
their claims because they lacked statutory and prudential standing. R.J. O'Brien I,
2012 WL 1032904, at *3–7. Because these claimants were unsecured creditors, the
Court concluded that they did not qualify as "innocent owners" under 18 U.S.C.
§ 983(d). As a result, they were outside the zone of interests that the civil forfeiture
statute protects and thus could not establish prudential standing. Id. at *5–6. The Court
then evaluated the claimants' statutory standing. It cited their status as general
unsecured creditors who lacked an interest in the specific funds at issue, preventing
them from properly stating such an interest under the civil forfeiture rules, specifically
Fed. R. Civ. P., Supp. R. G(5)(a)(i)(B). Id. at *6–7. For the same reason, the Court
decided that the personal injury claimants could not meet the requirements of the
forfeiture statute. Id. at *6. Finally, the Court denied the insurance claimants' request to
amend their claims on the ground that they lacked statutory and prudential standing.
The Court noted in particular that the claimants had not served citations to discover
assets, which would have created a lien on, and established an interest in, the disputed
funds. Id. at *8; see also 735 ILCS 5/2–1402(a), (m). The Court denied the personal
injury claimants' motion to intervene for similar reasons. Id. at *7.
As indicated earlier, the claimants registered their judgment in this district on
February 27, 2012, and the matter was assigned to Judge Gettleman. They filed a
praecipe for a writ of execution in that matter on March 13, 2012 and filed a notice of

5

citation to discover assets on April 6. Four days later, Judge Gettleman ordered
issuance of a writ of execution. On April 12, 2012, during a status hearing in the civil
forfeiture case, the parties made a joint oral motion seeking a finding that the forfeiture
and judgment enforcement matters were related cases under the relevant Local Rule
and transfer of the enforcement matter to the undersigned judge. The Court orally
granted the motion and followed that up with a written request to the Executive
Committee to transfer the case. The judgment enforcement matter was reassigned on
April 13, 2012. Since that time, the proceedings in the two cases have been almost
entirely intertwined.
In September 2012, five months after the claimants had obtained their writ of
execution, this Court denied the government's motion to quash the writ and granted the
claimants' motion to amend their claims to reflect the entry of final judgment in the New
York litigation. R.J. O'Brien II, 892 F. Supp. 2d at 1041. The Court found that the
language of § 201(a) of the TRIA authorized any claimed intrusion upon sovereign
immunity resulting from the claimants' entry into the case. Id. at 1043–45. That
statute's language similarly overrode the doctrines of prior exclusive jurisdiction and in
custodia legis, the Court found; those doctrines also did not apply because the
insurance companies' enforcement proceeding had been transferred to this Court. Id. at
1045–46.
The Court also rejected the government's challenges to the claimants' standing
to assert their motion to amend on constitutional, statutory, and prudential grounds.
The claimants had Article III standing at the time they filed their claims, the Court held,
because they had already acquired a default order against Al Qaeda and would have

6

lost the ability to execute on the funds had the government been able to forfeit them. Id.
at 1047–50. Further, the claimants had statutory standing to assert their interest in the
funds, because the TRIA supersedes the requirements of the civil forfeiture statute. Id.
at 1050–52. Finally, the Court concluded that the claimants had prudential standing
because their specific interest in the defendant property gave them statutory standing,
and because they were at the least within the zone of interests protected by the TRIA, if
not the civil forfeiture statute itself. Id. at 1052–53.
The government moved pursuant to 28 U.S.C. § 1292(b) to certify for
interlocutory appeal certain rulings made in the Court's September 2012 order denying
the government's motion to quash. The Court denied that motion, concluding that the
request for certification did not fulfill the criteria outlined in Ahrenholz v. Bd. of Trs. of
Univ. of Illinois, 219 F.3d 674, 675 (7th Cir. 2000). See R.J. O'Brien III, slip op. at 2–7.
The Court held that the government's proposed appeal could not satisfy the standard for
interlocutory appeal in section 1292(b)—in particular that such an appeal would not
speed up the ultimate resolution of the litigation or present contestable questions of law.
Id. The Court noted that the government itself had contributed to delays to that point in
time, having waited nine weeks after the Court's September order to file its motion to
certify its interlocutory appeal. Id. at 6–7.
Discussion
Summary judgment is appropriate if "there is no genuine dispute as to any
material fact and the movant is entitled to judgment as a matter of law." Fed. R. Civ. P.
56(a); see also United States v. Funds in the Amount of Thirty Thousand Six Hundred
Seventy Dollars, 403 F.3d 448, 454 (7th Cir. 2005) (internal quotation marks omitted).

7

On cross motions for summary judgment, the court assesses whether each movant has
satisfied the requirements of Rule 56. See Cont'l Cas. Co. v. Nw. Nat'l Ins. Co.,
427 F.3d 1038, 1041 (7th Cir. 2005).
The parties dispute few facts relevant to the resolution of these motions. They
agree that the defendant funds belonged to Al Tayyeb, and existed for the benefit of Al
Qaeda.1 Both sides argue that these undisputed facts entitle them to summary
judgment. The government's arguments are otherwise largely focused on its contention
that claimants lack standing, which it also presents as a matter of undisputed fact. The
Court's order of Sept. 25, 2012, addressed most of the arguments. For the most part,
the government's briefs simply reiterate arguments the Court has already rejected. To
the extent the parties raise arguments not made in earlier motions, the court addresses
them below. The Court will not repeat in their entirety its rulings on issues it has already
decided, but rather adopts the prior rulings.
1.

Constitutional standing
The government contends that the claimants did not have a sufficient interest in

the defendant funds as of the date on which they asserted their claims and therefore
lack constitutional standing to assert claims against the funds. The claimants argue in
response that their interest in, and lien against, the defendant funds is sufficient to
establish constitutional standing and that the TRIA permits them to attach the funds to
satisfy their judgment against Al Qaeda. A party can successfully allege Article III

1

The parties do dispute whether the government had prior knowledge of the claimants' potential
interest in the disputed assets and whether the claimants provided notice to the government of
their enforcement action. But neither party makes much if any of an argument that these
disputes are material to the Court's consideration of the parties' cross-motions for summary
judgment. The parties also argue over whether the claimants' alleged interest in the funds
exists, but that dispute is tied up in the questions of law discussed below.

8

standing at the summary judgment stage if it does not "rest on . . . mere allegations,"
but instead "set[s] forth by affidavit or other evidence specific facts, Fed. Rule Civ. Proc.
56(e), which for purposes of the summary judgment motion will be taken to be true."
Lujan v. Defenders of Wildlife, 504 U.S. 555, 561 (1992) (internal quotation marks
omitted). Claimants have satisfied this standard.
In its order of September 25, 2012, the Court determined that the claimants in
this action had constitutional standing in this matter at the time they filed their claims.
The Court relied on the Seventh Circuit's decision in United States v. 5 S 351 Tuthill
Rd., 233 F.3d 1017 (7th Cir. 2000), a forfeiture case in which the court noted that a
claimant need allege only injury, causation, and redressability to fulfill the standing
requirements of Article III. R.J. O'Brien II, 892 F. Supp. 2d at 1049–50. In 5 S 351
Tuthill, the claimant met this "undemanding" standard when he stated that he would
lose the opportunity to receive proceeds from the sale of land in which he had an
interest but no ownership or control. 5 S 351 Tuthill, 233 F.3d at 1021–22. This was
"more than enough to give him an actual stake in the outcome of the suit, and to make
his dispute with the government a genuine 'case or controversy' justifying our exercise
of judicial review." Id. at 1022.
Applying 5 S 351 Tuthill, the Court observed that the claimants had already
obtained their default order against Al Qaeda at the time they filed their initial claims and
answers, and "would have lost the ability to execute on the funds" if the government
forfeited them. R.J. O'Brien II, 892 F. Supp. 2d at 1049–50. Forfeiture would injure the
claimants concretely; it would eliminate their ability to execute on the funds. The court's

9

decision could redress this injury. Such a "lost ability to satisfy the default the claimants
had already obtained" satisfied the standing requirements of Article III. Id. at 1050.
This year, the Seventh Circuit provided clarification on the question of standing at
the pleading stage of forfeiture cases. "[T]he requirement of pleading Article III
standing . . . in a case such as this requires no more than alleging that the government
should be ordered to turn over to the claimant money that it's holding that belongs to
him." United States v. $196,969.00 [in] United States Currency, 719 F.3d 644, 646 (7th
Cir. 2013). Further, the court stated that it "is constitutional law 101" that in forfeiture
cases, "[a]ll that must be alleged is an injury, personal to the person seeking judicial
relief, that the court can redress, an injury such as the injury inflicted by the government
when it has got hold of money that belongs to the person and refuses to return it."
United States v. Funds in the Amount of $574,840, 719 F.3d 648, 651 (7th Cir. 2013).
While these cases may not be precisely on point here—in this case, the claimants are
seeking money belonging to a party that injured them, and not their own property back
from the government—they are still instructive on the requirements of constitutional
standing in forfeiture matters. The court warned against requiring claimants to actually
prove, and not just allege, their stake in the funds. "Imagine what it would do to federal
litigation to require every plaintiff (or claimant in a forfeiture suit, who is like a plaintiff)
not only to allege, but to prove, facts establishing the district court's constitutional
authority to decide his case. That is not required." $196,969.00, 719 F.3d at 646 (citing
Lujan, 504 U.S. at 561–62).
The government cites these Seventh Circuit cases to support its argument that
the claimants did not have Article III standing when they filed their claims, thus defeating

10

their motion for summary judgment and supporting the government's entitlement to
summary judgment on this basis. The cases, the government argues, show that the
requirements for a claimant to establish constitutional standing in a civil forfeiture action
"are not non-existent." Gov't's Surrepl. at 2. Because the Seventh Circuit indicated
that claimants must "allege a property interest in the subject funds," the government
argues, the claimants lack standing, because "they did not have a legal interest in the
defendant funds" at the time of filing. Id. at 12.
Yet these new cases do not disturb the Court's prior holding that the claimants
possessed constitutional standing when they filed their claims. The government seizes
upon the Seventh Circuit's language in that it refers to "money that belongs to the
person" when discussing standing in forfeiture cases. See $574,840, 719 F.3d at 651.
The government contends that any change in the status of the claimants' money
judgment against Al Qaeda (from pending to final) after the government initiated its
forfeiture action here is irrelevant, as the claimants were required to possess standing at
the outset of their entry into this case. The Court agrees that this change in status was
irrelevant to the claimants' Article III standing at the outset of the case, but not in a way
that favors the government's position. As the Court has held previously, and now
reaffirms, the claimants possessed Article III standing even before their judgment in
New York became final. The default order they had received when the government
initiated this action was not yet a final judgment, but it was concrete enough, as "[o]nly
the extent of their damages was uncertain." R.J. O'Brien II, 892 F. Supp. 2d at 1049.
"Forfeiture would have injured the claimants in a sufficiently concrete and particular
manner, because they would not have been able to execute on the funds. The

11

government's action threatened to cause this injury, and the Court could have redressed
the injury." Id. at 1050.
In sum, the Court reaffirms its holding that the claimants had standing under
Article III to bring their claims at the time they brought them.
2.

Statutory standing
The government maintains that the claimants lack statutory standing for three

reasons: they did not qualify as owners when they filed their claims, their lien has
expired, and their claims violate the doctrines of prior exclusive jurisdiction and in
custodia legis. The claimants argue that they complied with procedural rules governing
their claims and that the TRIA allows them to proceed with their claims notwithstanding
the requirements of other laws.
The TRIA provides:
Notwithstanding any other provision of law, . . . in every case in which a
person has obtained a judgment against a terrorist party on a claim based
upon an act of terrorism, . . . 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.
Terrorism Risk Insurance Act of 2002 § 201(a), 116 Stat. 2322, 2337 (codified at 28
U.S.C. § 1610 note). Under Rule G(5)(a)(i) of the Supplemental Federal Rules of Civil
Procedure for Admiralty or Maritime Claims and Asset Forfeiture Actions, those filing
claims to contest a forfeiture proceeding must "identify the claimant and state the
claimant's interest in the property," among other requirements. The civil forfeiture
statute similarly requires that such claims shall "state the claimant's interest in such
property." 18 U.S.C. § 983(a)(2)(C)(ii).

12

a.

Interaction of the TRIA, the civil forfeiture statute, and Rule G

In its September 2012 order, the Court held that the claimants have statutory
standing to assert claims in this case. The language of the TRIA was critical to the
decision, as its "notwithstanding" clause operates to supersede conflicting provisions of
law. Although the government had cited to district court cases holding otherwise, the
Court did not find them persuasive, concluding "that the TRIA's notwithstanding
provision . . . overcomes any barriers that the civil forfeiture statute imposes on
claimants' efforts to amend now that they have established an interest in the defendant
funds." R.J. O'Brien II, 892 F. Supp. 2d at 1051. The question was one of the
claimants' pleadings. Both Rule G and the forfeiture statute discuss only what a party
must include in its claim. They do not establish substantive or evidentiary requirements.
Despite this holding and this case's progress beyond the pleading stage to
summary judgment, the government continues to argue that the TRIA does not override
the pleading requirements of Rule G and the civil forfeiture statute, citing such cases as
Citizens Elec. Corp. v. Bituminous Fire & Marine Ins. Co., 68 F.3d 1016 (7th Cir. 1995).
This Court has already ruled that the statute at issue in Citizens Electric, the
Comprehensive Environmental Response, Compensation, and Liability Act, is
distinguishable from the TRIA, which by its terms supersedes the requirements of other
statutes. See R.J. O'Brien III, slip op. at 4. Furthermore, the court in Citizens Electric
held that a "notwithstanding" clause must be read in context to determine its scope.
Citizens Elec. Corp., 68 F.3d at 1019. In its prior order, the Court determined that the
context of the TRIA made clear that Congress intended the statute to "provide a
comprehensive way for victims of terrorism to enforce their judgments and eliminate

13

efforts by the executive branch to hinder execution by judgment holders." R.J. O'Brien
II, 892 F. Supp. 2d at 1044. The Court reasoned that because the TRIA specifically
allows judgment creditors such as the claimants here to execute on blocked assets, the
statute would be "effectively meaningless" if other laws and doctrines were permitted to
override it. Id.
The government also continues to rely on United States v. All Assets Held at
Bank Julius Baer & Co., 772 F. Supp. 2d 191 (D.D.C. 2011), which this Court previously
distinguished based on Seventh Circuit authority and a differing interpretation of the
TRIA's "notwithstanding any other provision of law" clause. R.J. O'Brien II, 892 F. Supp.
2d at 1051. The Court need not rehash its discussion of that case.
The government also cites to a recent Fifth Circuit decision to argue that "the
defendant funds in this case were removed from TRIA's ambit when they were arrested
by the Court pursuant to an OFAC license." Gov't's Surrepl. at 4 (citing United States v.
Holy Land Found. for Relief & Dev., 722 F.3d 677 (5th Cir. 2013)). This argument is
based on a provision of the TRIA that excepts property subject to a government-issued
license for final payment. See 28 U.S.C. § 1610 Note (d)(2)(B). The Court
acknowledges that it previously cited favorably to the decision in United States v. Holy
Land Found. for Relief & Dev., No. 3:04-CR-0240-P, 2011 WL 3703333 (N.D. Tex. Aug.
19, 2011), which the Fifth Circuit overruled.
The Court respectfully disagrees with the Fifth Circuit's ruling. That court decided
that the TRIA cannot supersede the forfeiture statute—the criminal forfeiture statute was
at issue in Holy Land—because to decide otherwise "assumes that the 'notwithstanding'
clause trumps any other law that has the incidental effect of removing funds from the

14

reach of judgment creditors." Holy Land, 722 F.3d at 688. But as this Court held
previously, that is exactly the intended effect of the TRIA, and to read the statute
otherwise would effectively prevent it from having any real effect. As stated earlier, this
Court noted that "Congress's purpose in adopting the TRIA was to provide a
comprehensive way for victims of terrorism to enforce their judgments and eliminate
efforts by the executive branch to hinder execution by judgment holders." R.J. O'Brien
II, 892 F. Supp. 2d at 1044 (citing Smith v. Fed. Reserve Bank of N.Y., 346 F.3d 264,
271–72 & n.7 (2d Cir. 2003)).
b.

Extension of citation proceedings and validity of lien

In addition to the arguments on the TRIA just discussed, the government alleges
that the claimants lack statutory standing because their lien on the defendant funds has
expired. Though it does not directly say so, the government contends that the operation
of Illinois Supreme Court Rule 277(f) caused the claimants' lien of to expire in April
2013. (The Court had granted a motion to extend the citation proceedings on October
18, 2012.) "Any lien that may have been created by the plaintiffs' enforcement action
was predicated on the now expired citation proceeding and is therefore no longer valid."
Gov't's Mem. at 32. The claimants contend that their lien was perfected on the day their
citation to discover assets was served. They further argue that they filed their initial
motion for summary judgment before the expiration of the extension of the lien they
requested in October 2012 and voluntarily terminated that motion to allow the
government more time to meet deadlines.
Federal Rule of Civil Procedure 69(a) governs the enforcement of writs of
execution on money judgments, and provides that the procedure for such execution

15

"must accord with the procedure of the state where the court is located." In Illinois,
Supreme Court Rule 277 governs citation proceedings, and section (f) of the rule states
as follows:
A proceeding under this rule continues until terminated by motion of the
judgment creditor, order of the court, or satisfaction of the judgment, but
terminates automatically 6 months from the date of (1) the respondent's
first personal appearance pursuant to the citation or (2) the respondent's
first personal appearance pursuant to subsequent process issued to
enforce the citation, whichever is sooner. The court may, however, grant
extensions beyond the 6 months, as justice may require. Orders for the
payment of money continue in effect notwithstanding the termination of the
proceedings until the judgment is satisfied or the court orders otherwise.
It is true that, as the government observes, a lien created as the result of a citation
proceeding "is valid only for six months after the citation respondents' first personal
appearance." Cacok v. Covington, 111 F.3d 52, 54 (7th Cir. 1997). The statute,
however, allows extensions. See Windcrest Dev. Co. v. Giakoumis, 359 Ill. App. 3d
597, 602, 834 N.E.2d 610, 614 (2005). "Even a cursory reading of Supreme Court Rule
277(f) reveals that the supplementary proceeding does not, in every case, automatically
terminate after the six months [sic] time limit has elapsed," because of the rule's
provision permitting trial courts to "grant extensions . . . as justice may require."
Kirchheimer Bros. Co. v. Jewelry Mine, Ltd., 100 Ill. App. 3d 360, 363, 426 N.E.2d 1110,
1115 (1981).
The Seventh Circuit extensively addressed Rule 277(f) in Laborers' Pension
Fund v. Pavement Maint., Inc., 542 F.3d 189 (7th Cir. 2008). There, a party argued that
the district court's allowance of more than six months' time to elapse between the
respondent's first appearance and its ruling in the case meant that the district court lost
its jurisdiction to hear the case. Id. at 193. Rejecting the party's argument, the Seventh

16

Circuit observed that "[c]ourts have adopted a flexible approach to the rule" and that
"[w]e have not found examples of cases where a reviewing court found that a lower
court's ruling was invalid as a result of Rule 277(f)'s operation." Id. at 194–95. "Since
the rule does not affect the federal court's jurisdiction, its benefits could be forfeited or
waived." Id. at 194. Implying that the complaining party's "active participation in the
district court proceedings long after the asserted 'expiration date'" defeated its
argument, the court held that the party had not suffered prejudice, and that the lower
court had the power to grant extensions "as justice may require" regardless of whether
any party had sought an extension. Id. "MAT Leasing is simply incorrect to say that the
'plain language' of Rule 277(f) requires the plaintiffs to seek an extension, and its
attempt to graft such a requirement onto the rule is without merit." Id. at 195.
As an initial matter, the government urges an inaccurate reading of Rule 277(f) in
light of the Court's prior order granting the claimants' motion to extend the citation
proceedings. The rule does not say that extensions of citation proceedings
automatically expire after six months. While the default course of action is for citation
proceedings to expire six months after a respondent's appearance, the rule provides its
own exception to that default—that a "court may, however, grant extensions beyond the
6 months, as justice may require." The rule therefore allows courts to place a stop on
the six-month clock for such extensions. It is true that, in this case, the claimants asked
the court to extend the proceedings until April 2013. But the rule does not deal with
automatic expiration of such motions, and the court's order on that motion did not
specify a time for the extension to expire. Nor did it need to, as the overall proceedings

17

in the case, including motions and briefing by both parties, have continued to this point,
well after April 2013.
Second, in light of the Seventh Circuit's ruling in Laborers' Pension Fund, it is
clear that the Court may grant an extension at any other time, regardless of whether any
party has requested such an extension. Indeed, the rule does not require that parties
request extensions; it simply allows the court to extend the proceedings "as justice may
require." The Court has already recognized that the government has contributed to the
delay in the resolution of this litigation. R.J. O'Brien III, slip op. at 2–7 ("[T]he long and
the short of it is that the government waited over nine weeks from the Court's decision
before filing its 1292(b) motion. . . . [T]he delay was an inordinate one by a litigant that
now contends that an interlocutory appeal will speed up the litigation.").
Given the ongoing nature of these proceedings, and the government's
contribution to the time they have taken to resolve, the Court's decision to extend the
citation proceedings remains in effect.
c.

Prior exclusive jurisdiction and in custodia legis

Finally, though they are not obviously part of a statutory standing argument, the
government contends again that the citation proceedings in this case violate the
abstention doctrines of prior exclusive jurisdiction and in custodia legis. These similar
doctrines hold that "the first court to obtain in rem jurisdiction has exclusive jurisdiction
of the res." United States v. Howell, 354 F.3d 693, 695 (7th Cir. 2004). The
government argues that the "claimants' efforts to obtain a lien were ultra vires," Gov't's
Mem. at 29, because the claimants asked another judge of this district to issue a writ of

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execution and citation to discover assets against the funds in this case when the
government had already initiated this action in this Court.
The Court has previously held that the "notwithstanding" provision of the TRIA
superseded the operation of these doctrines. R.J. O'Brien II, 892 F. Supp. 2d at 1045–
46. The Court cited authority from the Supreme Court that "notwithstanding" clauses
are generally interpreted to "supersede all other laws," and that "[a] clearer statement is
difficult to imagine." Cisneros v. Alpine Ridge Group, 508 U.S. 10, 18 (1993) (internal
quotation marks omitted). The government has not offered new arguments to the
contrary. The government also argues that, because the claimants sought a writ of
execution and citation to discover assets from Judge Gettleman, they violated "this
Court's exclusive prior in rem jurisdiction over the defendant funds." Gov't's Mem. at 30.
The government contends that what they characterize as an attempt to "utiliz[e] a
court's jurisdiction to act upon property that is already in the custody of another court"
violated both prior exclusive jurisdiction and in custodia legis. Id. at 31. The Court
reiterates its observation that this district is all one court, and in any event, the
claimants' enforcement action is now before the undersigned judge, not Judge
Gettleman, having been transferred because of its interrelationship with the
government's forfeiture action. Furthermore, as the court has previously noted, it would
have acted just as Judge Gettleman did vis-à-vis the judgment enforcement matter. In
any event, the government does not point to any cases in which the doctrines it cites
were considered to prevent a judge from ruling in a case after the case was transferred
from another judge of the same district court. The Court affirms its holding that the
claimants have statutory standing to assert their claims against the defendant funds.

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3.

Prudential standing
The government continues to argue that the claimants in this case lack prudential

standing to proceed with their claims because "they cannot establish that they qualify as
'owners' of the defendant funds." Gov't's Mem. at 34. The claimants argue that
because the government cannot prove the funds are subject to forfeiture in the first
place, it does not matter the claimants are not "innocent owners" under the forfeiture
statute. They further observe that this Court already held that the claimants are within
the zone of interests that the TRIA protects, and thus have prudential standing under
that law.
Under 18 U.S.C. § 983(d)(1), "[a]n innocent owner's interest in property shall not
be forfeited under any civil forfeiture statute." The statute defines an "owner" as one
who "an ownership interest in the specific property sought to be forfeited," but not one
who has "only a general unsecured interest in, or claim against, the property," or "who
exercises no dominion or control over the property." Id. § 983(d)(6)(A)–(B). The
government cites one out-of-circuit case, and one district court case, as authority for the
notion that a claimant's status as an "innocent owner" determines whether the claimant
has prudential standing. See United States v. $500,000 in U.S. Currency, 591 F.3d
402, 404 (5th Cir. 2009); United States v. $746,198, 299 F. Supp. 2d 923, 932–33 (S.D.
Iowa 2004)).
In its September 2012 order, the Court noted several ways in which the claimants
possess prudential standing to bring their claims. It observed that the Seventh Circuit
has labeled the zone of under protection of the forfeiture statute to be "rather
expansive." R.J. O'Brien II, 892 F. Supp. 2d at 1052 (citing 5 S 351 Tuthill Rd.,

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233 F.3d at 1023). It further noted that other circuits—though not all—have treated the
"innocent owner" question as one of the elements of an innocent owner's claim on the
merits, and not a standing question. Id. (citing United States v. One 1990 Beechcraft,
619 F.3d 1275, 1277 n. 3 (11th Cir.2010) (statutory definition of ownership does not
affect standing but instead is an element of merits); United States v. One Lincoln
Navigator 1998, 328 F.3d 1011, 1014 (8th Cir. 2003) (observing that "many cases refer"
to a claimant's status as an innocent owner "as part of the 'standing' inquiry, it is in fact
an element of the innocent owner's claim on the merits")); but see $500,000, 591 F.3d
at 404.
Noting the split in circuit authority and citing 5 S 351 Tuthill Rd., the Court ruled in
its September order that "a claimant who has statutory standing because it possesses a
specific interest in the defendant property" also has prudential standing, even if the
claimant does not meet the definition of "innocent owner" in the forfeiture statute.
O'Brien II, 892 F. Supp. 2d at 1052. Furthermore, even if the claimants are not within
the "zone of interests" under § 983, they are undoubtedly within the zone of interests of
the TRIA, providing them with statutory standing. That law's terms, including its
"notwithstanding" provision, permits the claims the insurance companies allege here.
Id. The government has not advanced new arguments calling these holdings into
question, and the Court affirms them.
4.

Sovereign Immunity
The claimants argue that the language of the TRIA "plainly waives" any claim to

sovereign immunity on the government's part, authorizing claimants, "notwithstanding
any other provision of law" to execute against assets like those at issue here. Cls.'

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Repl. at 15. The government maintains that sovereign immunity "precludes a party from
obtaining a writ of execution against or attachment to any asset possessed by the
United States or its agencies." Gov't's Mem. at 45. It contends that any waiver of such
immunity must be specific in the text of the statute in question.
As before, the Court disagrees. The Supreme Court has "never required that
Congress use magic words" to effect a waiver of sovereign immunity within a statute;
"Congress need not state its intent in any particular way." FAA v. Cooper, 132 S. Ct.
1441, 1448 (2012). To be sure, the TRIA does not contain the phrase, "Sovereign
immunity is hereby waived." Yet labored interpretation is not required to discern its
unequivocal waiver. As the Court noted in its September 2012 order, the TRIA
specifically permits claimants to execute against blocked assets. The law defines those
blocked assets as "any asset seized or frozen by the United States" under two different
statutory regimes. Terrorism Risk Insurance Act of 2002 § 201(d)(2)(A). It does not
allow execution against assets seized by any other entity. And, as noted above, such
execution is permitted "[n]otwithstanding any other provision of law." Considering these
provisions, as the Court noted previously, "if the statute does not waive the
government's sovereign immunity, it is effectively meaningless in this regard." R.J.
O'Brien II, 892 F. Supp. 2d at 1044. The Court sees no basis to disturb that holding
now.
5.

Claimants' execution of judgment against the defendant funds
It remains for the Court to decide whether the insurance companies are entitled

to summary judgment on their claim to execute on the disputed funds under the TRIA.
In this case, it is undisputed that the claimants have "obtained a judgment against a

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terrorist party on a claim based upon an act of terrorism"—in this case, against Al
Qaeda for damages resulting from the attacks of September 11, 2001. As the Court
noted in its September 2012 order, it is undisputed that the assets in question are
"blocked," a status that is essential for a TRIA claim to go forward; the government
labeled the assets as such in its complaint.
The government argues that the claimants are not entitled to summary judgment
on their enforcement action in this case, as they "attempt[ed] to use the enforcement
action to improperly bypass the statutory criteria established for filing a claim to assets
subject to a pending civil forfeiture proceeding." Gov't's Mem. at 38. The Court has
already addressed this argument. As the Court observed in its prior order, the
claimants in this case did initiate a separate action to register their judgment against Al
Qaeda, after which they filed a citation to discover the assets at issue here. Yet the
claimants also sought to participate in the government's forfeiture action, not bypass it;
they filed claims and answers, which the Court struck, and then filed new claims and
answers after serving their citation. The government argues that the "TRIA does not
provide claimants a mechanism to bypass forfeiture's fundamental requirements."
Gov't's Surrepl. at 3. The Court has already addressed the argument, concluding that
the TRIA allows claimants to assert their interest in the disputed funds notwithstanding
any other provision of law.
In light of this discussion, the RJO/Al Ghamdi funds in question are "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

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liable." Terrorism Risk Insurance Act of 2002 § 201(a), 116 Stat. 2322, 2337 (codified
at 28 U.S.C. § 1610 note).
Conclusion
For the foregoing reasons, the Court grants the claimant insurance companies'
motions for summary judgment [docket no. 127 in Case No. 11 C 4175; docket no. 55 in
Case No. 12 C 1346] and denies the government's motion for summary judgment
[docket no. 134 in Case No. 11 C 4175]. The Clerk is directed to terminate both cases.
Claimants are directed to provide a proposed form of judgment for each case by no later
than October 31, 2013, after first providing a draft to the government's counsel. The
Court notes, in this regard, that it is setting a longer-than-usual deadline due to the
current government shutdown (though the government's attorney, who is generally
assigned to the criminal side of the United States Attorney's Office, appears to still be
on the job). The Court also notes in that regard that because no judgment or final order
has yet been entered, the time to appeal has not yet begun to run. The case is set for a
status hearing on November 5, 2013 at 9:30 a.m.

MATTHEW F. KENNELLY
United States District Judge
Date: October 9, 2013

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