Levin et al v. Bank of New York et al

Filing 1106

OPINION AND ORDER re: #1098 MOTION for Leave to File Supplemental Complaint filed by Lucille Levin, Jeremy Levin. For the foregoing reasons, Plaintiffs' motion for leave to file a supplemental complaint is GRANTED in part and DENIED in part. The Clerk of Court is directed to close the motion at Docket Number 1098. SO ORDERED. (Signed by Judge J. Paul Oetken on 10/27/2017) (mml)

UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK
JEREMY LEVIN and LUCILLE LEVIN,
09-CV-5900 (JPO)

Plaintiffs,

OPINION AND ORDER

-vTHE BANK OF NEW YORK MELLON,
et al.,
Defendants.
THE BANK OF NEW YORK MELLON,
et al.
Third-Party Plaintiffs,
-vSTEVEN M. GREENBAUM, et al.,
Third-Party Defendants.

J. PAUL OETKEN, District Judge:
Plaintiffs Jeremy Levin and Dr. Lucille Levin (“Plaintiffs”) are judgment creditors of the
Islamic Republic of Iran (“Iran”). In 2009, they filed this suit seeking turnover of Iranian assets
within the United States in an effort to enforce an unsatisfied judgment against Iran. Plaintiffs
now move for leave to file a supplemental complaint pursuant to Federal Rule of Civil Proecudre
Rule 15(d). For the reasons that follow, the motion is granted in part.
I.

Background
The Court presumes familiarity with the factual and procedural history of this case, as

discussed in its two prior Opinions and Orders issued on March 4, 2011, and September 23,
2013. See Levin v. Bank of N.Y. (Levin I), No. 09 Civ 5900, 2011 WL 812032, at *1–4 (S.D.N.Y.

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Mar. 4, 2011) (Patterson, J.); Levin v. Bank of N.Y. Mellon (Levin II), No. 09 Civ 5900, 2013 WL
5312502, at *1‒2 (S.D.N.Y. Sept. 23, 2013) (Patterson, J.).
Plaintiffs hold an unsatisfied final judgment of $28,807,719 against Judgment-Debtor
Iran, arising out of the 1984 kidnapping of Jeremy Levin in Beirut, Lebanaon. (Dkt. No. 1099-1
(“Supp. Compl.”) ¶ 1.) Levin’s abductors were terrorists who were trained, supported, aided,
funded, and directed by Iran. 1 Id.
Plaintiffs filed the original Complaint in this action in 2009 (the “2009 Complaint”),
seeking turnover of all assets within the jurisdiction of the United States in which Iran has a
direct or indirect interest. (Dkt. No. 1099 at 2; Dkt. No. 70.) The 2009 Complaint alleged that
Defendant-Garnishee J.P. Morgan Chase Bank, N.A. (“JPMCB”), along with other New York
banks, possessed “assets blocked by the U.S. government due to the fact that Iran has an interest
in them either directly or indirectly (‘Iranian Blocked Assets’).” (Dkt. No. 70 ¶ 3). 2
Although Plaintiffs, along with other judgment creditors, have obtained turnover of
certain Iranian assets from Defendant-Garnishee JPMCB (see, e.g., Dkt. No. 1089), Plaintiffs’
judgment has not been fully satisfied. (Dkt. No. 1100 ¶ 4). On November 29, 2016, Plaintiffs
served interrogatories on JPMCB. (Supp. Compl. ¶ 4.) JPMCB’s responses, which were served

1

The facts set forth in this section are taken from Plaintiffs’ proposed
Supplemental Complaint. (See Supp. Compl.) Because Defendant J.P. Morgan Chase Bank,
N.A. partially opposes leave to supplement on futility grounds, “the allegations of the [proposed
supplemental] pleading . . . must be presumed true, and the Court must draw all reasonable
inferences in the pleading party’s favor” in deciding whether to grant leave to supplement.
Unique Sports Generation, Inc. v. LGH-III, LLC, No. 03 Civ. 8324, 2005 WL 2414452, at *5
(S.D.N.Y. Sept. 30, 2005).
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More specifically, these assets were blocked by the United States Treasury
Department’s Office of Foreign Assets Control (“OFAC”). See Levin I, 2011 WL 812032, at *1.
“OFAC administers various sanctions against terrorists . . . and state sponsors of terrorism . . . by
enforcing prohibitions on transactions and trades and/or blocking property or assets of . . .
terrorism-supporting countries . . . .” (Supp. Compl. ¶ 34.)
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on January 12, 2017, revealed the existence of two additional, previously undisclosed Iranian
Blocked Assets: (1) “a deposit account” under the name of Lebanese businessman Kassim
Tajideen (“Tajideen Account”); and (2) an account “hold[ing] the proceeds of a wire transfer,
also known as an electronic funds transfer (‘EFT’), that was blocked by JPMCB under
. . . 31 C.F.R. Parts 560, 561 and 594 [‘Iranian Sanctions’]” (“Saderat Account”). (Id.; Dkt. No.
1101 at 1).
Plaintiffs move for leave to file a supplemental complaint seeking turnover of the
Tajideen Account and the Saderat Account for collection and partial satisfaction of their
judgment against Iran pursuant to § 201(a) of the Terrorism Risk Insurance Act of 2002
(“TRIA”) 3 and §§ 1610(f)(1)(a) and (g)(1) of the Foreign Soverign Immunities Act (“FSIA”). 4
(Dkt. No. 1099 at 4; Supp. Compl. ¶¶ 8–9.)
3

Section 201(a) of TRIA provides:
Notwithstanding any other provision of law, and except as provided in subsection
(b), in every case in which a person has obtained a judgment against a terrorist
party on a claim based upon an act of terrorism, or for which a terrorist party is
not immune under section 1605(a)(7) of title 28, United States Code, the blocked
assets of that terrorist party (including the blocked assets of any agency or
instrumentality of that terrorist party) shall be subject to execution or attachment
in aid of execution in order to satisfy such judgment to the extent of any
compensatory damages for which such terrorist party has been adjudged liable.

TRIA, Pub. L. No. 107-297, § 201(a), 116 Stat. 2322, 2337 (2002) (codified at 28 U.S.C. § 1610
note).
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Section 1610 of FSIA provides, in relevant part:
(f)(1)(A) Notwithstanding any other provision of law, including but not limited to
section 208(f) of the Foreign Missions Act (22 U.S.C. 4308(f)), and except as
provided in subparagraph (B), any property with respect to which financial
transactions are prohibited or regulated pursuant to section 5(b) of the Trading
with the Enemy Act (50 U.S.C. App. 5(b)), section 620(a) of the Foreign
Assistance Act of 1961 (22 U.S.C. 2370(a)), sections 202 and 203 of the
International Emergency Economic Powers Act (50 U.S.C. 1701-1702), or any
other proclamation, order, regulation, or license issued pursuant thereto, shall be
subject to execution or attachment in aid of execution of any judgment relating to
a claim for which a foreign state (including any agency or instrumentality or such
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II.

Discussion
Under Federal Rule of Civil Procedure 15(d), a party may “move to serve a supplemental

pleading and the district court may grant such a motion, in the exercise of its discretion, upon
reasonable notice and upon such terms as may be just.” Quaratino v. Tiffany & Co., 71 F.3d 58,
66 (2d Cir. 1995). “Absent undue delay, bad faith, dilatory tactics, undue prejudice to the party
to be served with the proposed pleading, or futility, the motion should be freely granted.” Id.
(citing Foman v. Davis, 371 U.S. 178, 182 (1962)).
With respect to the Tajideen Account, the Court concludes that Plaintiffs should be
permitted to supplement their original complaint. Upon discovering the existence of the
Tajideen Account on June 12, 2017, Plaintiffs acted promptly by delivering writs of execution
for immediate service and levy on Defendant JPMCB on June 13, 2017. (Dkt. No. 1100 ¶ 7.)
state) claiming such property is not immune under section 1605(a)(7) (as in effect
before the enactment of section 1605A) or section 1605A.
...
[(g)(1)] Subject to paragraph (3), 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—
(A) the level of economic control over the property by the government of
the foreign state;
(B) whether the profits of the property go to that government;
(C) the degree to which officials of that government manage the property
or otherwise control its daily affairs;
(D) whether that government is the sole beneficiary in interest of the
property; or
(E) whether establishing the property as a separate entity would entitle the
foreign state to benefits in United States courts while avoiding its
obligations.
28 U.S.C. § 1610.
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There is no evidence of “undue delay, bad faith, [or] dilatory tactics.” Quaratino, 71 F.3d at 66.
Nor is there any evidence of undue prejudice or futility. See id. Most important, JPMCB does
not oppose Plaintiffs’ motion as it relates to the Tajideen Account. (Dkt. No. 1101 at 2.)
With respect to the Saderat Account, however, the Court concludes that supplementation
would be futile. In order to “execute a judgment on the blocked assets of a terrorist party, or its
agency or instrumentality, to satisfy a judgment against the terrorist party,” a plaintiff must
establish that
(1) the plaintiff obtained a judgment against the terrorist party; (2)
the judgment is for a claim based on an act of terrorism; (3) the
assets are “blocked assets” within the meaning of TRIA; and (4)
execution is sought only to the extent of the plaintiff's outstanding
judgment for compensatory damages.
Doe v. Ejercito De Liberacion Nacional, No. 15 Civ. 8652, 2017 WL 591193, at *2 (S.D.N.Y.
Feb. 14, 2017). Here, JPMCB argues that supplementation would be futile because the Saderat
Account does not qualify as a “blocked asset” under TRIA, as it is not the property of a terrorist
party. The Court agrees.
In Hausler v. JP Morgan Chase Bank, N.A., the Second Circuit identified certain
conditions precedent to treating an EFT at a bank located in New York 5 as the property of a
terrorist state under TRIA § 201(a):
[U]nder New York law EFTs are neither the property of the
originator nor the beneficiary while briefly in the possession of an
intermediary bank. As such, the only entity with a property interest
in the stopped EFT is the entity that passed the EFT on to the bank
where it presently rests. Thus, in order for an EFT to be a blocked
asset of [a terrorist state] under TRIA § 201(a), either [the terrorist
5

Here, as in Hausler, “the bank[] at which the EFTs are blocked are in New York,
so we look to New York property law” to “define the ‘rights the judgment debtor has in the
property the [creditor] seeks to reach.’” Hausler v. JP Morgan Chase Bank, N.A., 770 F.3d 207,
212 (2d Cir. 2014) (second alteration in original) (quoting Calderon-Cardona v. Bank of New
York Mellon, 770 F.3d 993, 1001 (2d Cir. 2014)).
5

state] itself or an agency or instrumentality thereof (such as a stateowned financial institution) [must have] transmitted the EFT
directly to the bank where the EFT is held pursuant to the block.
770 F.3d 207, 212 (2d Cir. 2014) (last alteration in original) (emphasis added) (citations omitted)
(quoting Calderon-Cardona v. Bank of New York Mellon, 770 F.3d 993, 1001‒02 (2d Cir. 2014))
(internal quotation marks omitted). In other words, unless a terrorist state transferred the EFT in
question directly to the blocking bank, the EFT is not attachable “[b]ecause no terrorist party or
agency or instrumentality thereof has a property interest” in it. Id.; see also Ejercito, 2017 WL
591193, at *3 (“[O]nly property of a target party can be attached under TRIA[,] and . . . a midstream EFT is the sole property of the entity that transmitted the EFT to the blocking bank.”).
Here, as in Hausler and Ejercito, it is “undisputed that no [terrorist state] transmitted any
of the blocked EFTs in this case directly to the blocking bank.” Ejercito, 2017 WL 591193, at
*2 (quoting Hausler, 770 F.3d at 212) (internal quotation mark omitted). The blocked EFT in
question was transmitted to JPMCB directly by Lloyd’s Bank. (Dkt. No. 1101 at 11; Dkt. No.
1104 at 6). Under established Second Circuit law, the EFT is thus considered property of
Lloyd’s Bank, which is not an agent or instrumentality of Iran; consequently, the EFT cannot be
attached under TRIA.
Plaintiffs attempt to sidestep Hausler’s rule based on the fact that Bank Saderat used
Lloyd’s bank as a “correspondent bank” 6 rather than an “intermediatry bank.” (Dkt. No. 1104 at
6.) The Court concludes that this is a distinction without a difference, at least as it relates to the

6

According to Plaintiffs, a “correspondent bank” is a “bank ‘that acts as an agent
for another bank, or engages in an exchange of services with that bank, in a geographical area to
which the other bank does not have direct access.’” (Dkt. No. 1104 at 8 (quoting Bank, Black’s
Law Dictionary (10th ed. 2014)).) See also Sidwell & Co. v. Kamchatimpex, 632 N.Y.S.2d 455,
457 (N.Y. Sup. Ct. 1995) (“[A] foreign financial institution . . . that is unable to operate a branch
or subsidiary office in the United States maintains a dollar account at a [correspondent bank], to
effect US dollar transactions for itself and its customers.”).
6

Second Circuit’s rule in Hausler. As the Ejercito court explained, even where an EFT is
transferred to a blocking bank by a “correspondent bank,” the transferred asset is considered the
“sole property” of the correspondent bank, rather than the “principal” bank (i.e., Bank Saderat).
See Ejercito, 2017 WL 591193, at *1–3. Therefore, the EFT is not attachable unless the
correspondent bank is itself a terrorist state or an agent or instrumentality thereof. Because
Lloyd’s Bank is not a terrorist state, the Saderat Account is not attachable, and supplementation
would be futile as to that asset.
III.

Conclusion
For the foregoing reasons, Plaintiffs’ motion for leave to file a supplemental complaint is

GRANTED in part and DENIED in part.
The Clerk of Court is directed to close the motion at Docket Number 1098.
SO ORDERED.
Dated: October 27, 2017
New York, New York
____________________________________
J. PAUL OETKEN
United States District Judge

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