Levin et al v. Bank of New York et al

Filing 342

OPINION AND AMENDED ORDER AND PARTIAL FINAL JUDGMENT. #99892 Due to their failure to obtain a court order under 28 U.S.C. 1610(c) prior to serving the writs of execution on the New York Banks, the Levins writs are invalid. In addition, the Heisers' writ is not capable of attaching the Bank of New York assets located in New York state because it was issued by a Maryland court and served on the Bank of New York in Maryland. The Greenbaum and Acosta Judgment Creditors have established that there is no issue of material fact that they hold a priority interest in those Phase One Assets which they have attached at Citibank and JP Morgan, and those assets are subject to attachment. The Greenbaum and Acosta Judgment Creditors are entitled as a matter of law to a grant of partial summary judgment as to those assets. The Court having determined that there are good grounds for entering a partial judgment immediately, this Opinion and Order constitutes a partial final judgment, and as further set forth. (Signed by Judge Robert P. Patterson on 3/4/2011) (rjm) Modified on 3/7/2011 (ml). (Additional attachment(s) added on 3/7/2011: #1 NOTICE OF RIGHT TO APPEAL) (ml). Modified on 3/7/2011 (ajc).

UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF NEW YORK

MR. JEREMY LEVIN and DR. LUCILLE LEVIN, 09 CV 5900 (RPP) Plaintiffs - against

BANK OF NEW YORK, JP MORGAN CHASE, SOCIETE GENERALE and CITIBANK,

OPINION AND AMENDED ORDER

Defendants.

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BANK OF NEW YORK MELLON, JP MORGAN CHASE, SOCIETE GENERALE and CITIBANK,

Third-Party Plaintiffs - against

STEVEN M. GREENBAUM, et al.

Third-Party Defendants.

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BANK OF NEW YORK, JP MORGAN CIlASE, SOCIETE GENERA·.LE and CITTBf\NK,

Third-P.arty PlaintiHs

- against·

ESTATE OF MICHAEL HEISER, el aI.,

Third-Party Defendants,

------._---.--.-------------_._..--.----------._.---------------J{
ROBERT I'. PATTERSON, JR., U.S.D.J.
Plaintiffs Jeremy ami Dr. Lucille T ,evin move for partial summary judgrnent and a
turnover order as to certain accounts blocked pursuant to regulations issued by the Office of Frocign Asset Cuntro1 or the United States Depar1:menl ufTrcasury (the '-Phase One
A:;~t-t.:;")

helll by scvaal

bank~:

Bank of New Yurk Mellon ("Hank ofNew York"), Suciete Generui-e,

Citibank, N.A. ("Citihank"). and JP Morgan Chase Bank, N.A. ('<JP Morgan") (collectively, the

"New Yark Banks"). PI uinli ffs alsc seek ;;ummary jUdgment as to certain third party defendant
Iran.ian Judtment Creditors. namely the Heiser Creditors and th~ Greenbaum nnd !\co.sta Creditors, d,~sjgm.lting the Plaintiffs as the holders ora iirs! priority lien interest in tht! Phase One

Asst:LS_ The Heiser Credilors cross move for summary judgment designating the Heisers a$ the
holders of a iirsi priority lien interest in thre~ blocked wire transfers held at tht: Bank oiNev.'
York. Th"e (ireenbaum and Aco~la Creditors similarly cross-move Ihr ~urnmary judglncnt

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designating them as th(! holders of a first priorily lien UltCl'Cst in assets held by JP Murg<ln and

CiLibank.

BACKGROUND
Plaintiff Jeremy Levin was the CNN bur~au chief in Lebmton uuri.ng n period when the

Islamic Republic of Iran ("Iran") was using the organization Hizbollah directly and indirectly to
commit terrorist acts against ..l\rncrican civilians. (Plaintiffs' Stati::ment of Undisputed Facts
PurS·l.llll1l10 Local Rule 56, 1 ("PIs.' 56.1 Stalement") aT ~11.) I Mr. Levin was tak<::n hostage and

tortured duril1g 1983-84. when he was held by Hizhc)iiah in a house directly across from the Ira..'lian Revolutionary Guard. headqllat1ers in the Bckka Valley uf Lebanon. (Pis: 56.1
Statement at ~ 2.) After
hi~

e5cape from his captors, Mr. levin returned to thl.;: t;nltcd Stat~s.

\J.!L e..t ~ J.)

The effects of ~1r. Levin's tDrture and imprisonrncnt caused severe and ongoing

harm to boll~ .M!. I.evin and his wife Dr. Levin. (.llt.)
On February 6, 2008, following a trial, the Vnilcd States District COUl1 for the District of Columbia entt:redjudgment in r'avor of the Levins, and against the Islamic Republic ofIran, the Iranian !\tIinistry on fnfQrmation and Set:llrity, al1d the Trnni<.m Islamic Revolulionary (iuard Corp (collectively, the "Iranl<m Judgment Debtors"). (ld. at'; 4.) Sec Levin v. The Islarnk R~lIbli.~ QfTran. 529 F.Supp. 2d 1 (D. D.C. 2007). The judgmenl awards the Levins $28,&01,719. (1d.) Dpon receivi.ng this awnrd, the Levins served information subpoenas on the OHicc of j'oreigl1

I\ssct Contrl)l ("OFAC"), which produced government records identifying cf;;!rlain assets in
which Inm ('C its in:!itrumenl.alitics have an interest, and that were accordingly blocked by OF AC
[wm january 1,2007 to June 30, 2008 ("Blocked ASiiets"). (ld. at 1j 5.) OfAC re~'Ponded vi<l a

I

Unless otherwise nored, cit,\tiom li.l Ihe parties Staterooms of Undi~puLcd FUl:L:> m'e admitte:d by all oPflo~ing

p<l.nles.

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letter to Plaintin's J.al~d October 6,2008, which uisc10scd infonnation regarding certain Iranian assets held in the United Stales pursuant to various blocking regulations. (Declaration of SU/.eUc Smith, ("Sm.th Decl.") Ex. 2.) The Levil1~ then proceeued to serve additional information
::)ubpoen~ on

the New Yurk. Banks, and in response, further identifying infoffili.1110n l-elated to

OPAC Blocked Assets was disclost:t1 from the ~ew York Danks' business records. (PIs: 56.1 Statement at 5.) On April 20, 2009, the Levins registered tlleirjuclgment wiTh the Uniteu States Di!':lrict Court for the Southern District of New York, and on October 14,2009, the Levins sl:rvl.!d their

judgmenL on th~ Iral1ian Judgment Debtors 'through court <l\1d diplomatic channels. (Ill. at ~~1 6
7) On June 19: 2009, the I,evins delivered Writs of Execution, issued by the Clerk of this Court.

tu the United ~tates Marshal for the Southern District ofNl.:w York for service on thE.) New Yark Banks. (rd. at 'V: 8.)
Th~

Marshal served the Nt:w York llal1ks with the Wriw>. (ld.) On June ::26,

2009, the Levins filed their complaint in this Court. (lQ, at ~19.) On January 11,20] O. thi::; Court entered an Order authorizing Third-Party Tnlerp!cijder Complaints amI divided the proceeding into two phase!>. In Phase One, the Court would determine lhe fight ofPlalntiifg to
eXt::Cl1tc

and collect cl.:rtain assets selected by Plaintiffs (the

rhase One Assets). (Sm1th [)ecl., Ex. 12.) Phase Two would involve otht:T ass¢ts within the :;cope of the Complaint. On February 1. 2010) Defendants Bank of t-:cw Ynrk. JP Morgan,
Sut:i.::tc Gcnen\le and Citibank filed an Interpleader Complaint punmant to Rule 22 of th~ Federal
Rules of Ci\/il Procedure against a number of parties that held judgments a.gainst the Iranian

Judgmenl Debtors, a;.; well as commercial entities "'lith conn~ction8 to the hlocked asset::., in ol'der
lo determine whether any u(' these pa1tie~ had priorily interests to the assets ~ought by the Levins.
(Sec Interrl;~adcr Complaint, february 1 ~ 2010, ECF No. 60.) The Greenbaum and Acosta 4

Judgmenl Creditors were served with tIl;;: Interpleader Complaint on February 19, 2010. (Pl:=;.·
Rule 56. I Statement at ~ 19.) The Heiser Judgment Crl!:ditors wert:' served wilh (he Interpleader
ComplainL Oil June 1,2010. (ld.)

The Greenbaum Judgment Credilors hold a judgment issued by lht: U.S. DistricT Court fbrthe District of Columbia tor $19,878,023.00 againsl the Islamic Republic oflran and the

Iranian Minislry of lnformation and Security ("MDlS"). (The Greenbaum and Acosta ludgment
Creditors'
C~lUmcrstateme.l1l

or Undisputed Facts Pursuanl Lu Local Rule 56.1
or James L. Bernard, Ex. 3.)

(,'Greenbaum/Acosta 56.1 Counterstatemcnt") at' 68; Declaration

This judgment was awardelt on AU~USl 10,2006 in satisfaction of a ~uit brought by the

Greenbaum Judgmt!lll Credhors under 28 U.S.C. § 1605(a)(7) againsl Iran and th~ MOlS for

damages the Greenhaum Judgmenl Creditors suffered. in conjunt;tion with the death of a woman
killcclln an August 9, 2001 terrorist llttack 011 a restaurarJ in Jerusalem, Israel. (Greenbaum/Acosta 56.1 Counterstatcment a[ mf 66-67.) The Greenbaum Judgment Credirors
~erved

Iran and MOIS with their judgment on April 22, 2007 through court and diplomatic

channels.

(JiL fit ~ 69.)

On December 10. 200S, the Greenbaum Judgment Creditors registen:~t.l
al fj

their judgment in the Southern District ofNew York. (Id.
Gr~enbaum

70.)

011

December 14,2009. the

Judgment Creditors obtained an order from this cault (Jones, J.) pursuant to 28

U .S.C. § 1(j 1O(e) permitting lhem to obtain a writ of execulion LO levy against property of 1mll

held by Citi'Jank in this District.

C!s1 at ~ 71.)

On D0ccmber 21,2009, the Greenbaum Judgment

Creditors obtained the writ of execution from the Clerk of the Cami and delivered it to the 11.S.

Marshal for the Southem Di5>trict of New York. (rd. at ~ 72.) On April 5, 2010, the Grc:enbaum
Judgment Credilors obtained an amended \\,·it of execution Jrml1 the Clerk of Court <tnd

delivered it to the U.S_ Marshal for the Southern District of New York on April 6. 201 O. O~t at il

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73.) The U.8. Marshal levied by service of th~ amended execution upon Citibank on April 15. 20 10.

(® On April 15, 2010, the Greenbaum Judgment Creditors filed their Answer to lhe
(.!.!.b at ~

Third Party Complaim and Counterclaims in response to the interpleader complaint.

74.)
On August 26,2008, the Acosta Judgment Creditors ublaincd a judl::,rment in tht: U.S. District Comt for the District of Columbia againsr the Islamic Republic of Jriin and the MOIS in the amount of$350,172,OOO.
lO:WSllit filed

(1h at ~ 77.) This judgment was awurded in satislaclion of a

by the Acosta Judgment Credilor:s against Iran and the Minislry under 28 U.S.c. §

1605A lO compensate the Acosta Judgment Creditors for damages suffered from the as:-la.'>sination of Rabbi Meier Kahane and the shooting oflrving. Franklin and U.S. PMtal Oftker
Carlos Acos':tl (1n November 5, 1990. (ld. at ~~ 75-76.) On SGptcmber 28,2009, the Aco~ta

Judgment Creditor!:) ~crvcd Iran nnd the MOIS with their judgment through court and diplomatic

chrumcis. (Yd.

at'i 78.)

The Acosta Judgment Creditors registered thei.r judgment in the

Southern Di,<.:;!rict o£N~w York on December 1,2008, and on December 14, 2009, obtained an
order from t.le lhis Court (Jones. J.), pun;lIi.1Il( to 28 tJ.S.C. § 16 10 (c) ~rmitting them to obtain

writs of execution to levy ilgainst property of Iran held by Citibank and JP Morgan Chase in this
DislIict. (Id. at ~ 80.) On December 21, 2009, the Acosta Judgment Creditors obtained Writs of

Execution from the Clerk oflhc Court a.nd delivered lhl:ffi to the U.S. Marshal. (ld. at ~ S I.) On April 5. 2010. the Acosta Juugment Creditors obtained amended Writs of Execution from the Clerk of COf..lrt and delivered th.cm to the U.S. Marshal for the Southern District of New York on April 6, 2010,

(l!L at ~ 82.)

The U.S Marshal levied by servtct:: of the amended writs on April

15,2010. Qd.) On April 15,20 10, the Acosta Judgment Creditors tiled their Answer to the

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Third-Party Complaint and CotlIlterdaims in response to the New York Banks: interpleader
complaint. (fd. a.t ~ 83.) On S\)ptcmber 29, 2000 ilnd October 9, 2001, twu groups of plaintIffs liktl claims in the United State:.; District Courl [or th~ I)i~lrict of Columbia against Iran. the MiI'jstry of

Information lind Security <lnd the Iranil:ln R~volutionar)' Guard. (The Heiser Judgmt:nl Cn::ditors' Statemel1t of Undisputed Facts Pursuant to Local Rule 56.1 ("Heiser 56.1 Statement") at cl'i 3-4.) These suils sought compensation tor damages suffered in conjunction \...ith lhc June 25, 1996 bombing of the Khohar Towers cOlllpiex in Saudi Arabia. (Heiser 56.1 Stalt:mcnt at ~fr 1-2.)
On February 1,2002, the
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actions were: consolidated, and on December 22,2006, the I·Tdser

Judgment Credirors obtained a judgment pursuant to 18 U.S.C. § 1605(a)(7) in the amounl of

$254.431,90} agaim;t Iran. the ~/IOIS, and the Iranian Revoltltionnry Guard. (Ill.

at'l,i 5-6.)

On

February 7,2008, the D.C. District Court issued an order pursuant to 28 U .S.C. § 1610(e)

permitting the IIei:;er Judgment Creditors to pursue attachment in aid of execution of the
December 2006 judgrnent (rd. at ~ 7.) On January 1),2009, the D.C. Distrkl Court converted

the Hci!;er Judgment Creditors' December 2006 judgment issued tmdcr 28 U.S,C. § 1605(a)(7)
into ajudgmcllt pursuant to 28 C.S.C. §1605A. (Id. at ~ 8.) On August 17, 2008, the Heiser Judgment Creditors registered the Judgment with the U.S. Di!o>trict Court for the District of Maryland.

(let al~; 11.)

On April 27, 2010, the Heiser judgment Creditors filed a Requeiit for

Writ to the Bank of New York in the Maryland Dislrit:l Court. (Td. at,! 11 12.) 'rhis writ was
~ssl1ed on Apri130. 201Q, and served on lhe Bank of New York in ~aryland on May 3, 2010.

(Id. at '1M! 12-13.) In addition to the Heiserli and the Greenbaum!i and Acosta~, there remain eight other

judgment crcditOT groups that were interpled :1S third-party defendants. Of these, only 4 hay\,;

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(lsserted any intt.!f1:st in the Phuse One AS~d.s~ the Brown, Blan, Silvia and Rubin judgmt:'nl
creditor:i. (Pls.)s 56.1 Statement at ~ 22-13: Smith Dec!., Exs. 41-43.) With tIle exception

or the
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Rubin jUdgm;:nt creditors, none of the other grOllpS have attached or executed againsT any

r Lhc

PhLl:;e One A,;scls. (Smith DecL, Ex. 58.) The Ruhin judgmenl creditors have not obtain0cl all

onler of the court pUrSU311llo 28 U.S.C. § 16l0(c) authorizing execution, DOT have they moved
for a turnover order. (Smith Decl., Ex. 41.)

The New York Danks also fi led an interpleader complaint again~t comrnercial entities
that might have an interest in the r310cked Assets by virtue of their connections to the blocked wire trans[er3 or accounls.~ec Onler, January 1 1,2010, Docket 0[0. #33. Commer:zbank is the

only commercial third-party defendant to have made a claim 10 an)' of the Phase One
(Smith Decl., Ex. 50). However, Commerzbank.'s claim
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AS!-iel~.

withdrawn,

al1u

the inteTlcader

complaint dismissed a$

Lo C0Il11l1crzbank

by Stip\.1lation and Order orthis Court dated J lily 26,

2010. Therefore, the only parties seeking tbe Phase One Assets wbo have attacht:d or executed against them and moved for turnover are the Levin, Hei!>er, and Gre\;;nbaum and J\cO$la Judgment Creuitors.
On J·.lly 13,2010, the Levin Plaintiffs filed
i.t

Motion for Summary Judgment that

Pbintiffs possess a priority intercsl in the Phase One Assets and seeking a Turnover Order
dir~cting the

New York Bank:; to turn over lhe specified Phase One Assets. On SepLemb&.::( 13,

:2010, tbe Heiser Judgment Creditors filed a Cross-Motion for Sununary Judgmt:l1l lht1t the
lleisers posse~s a priority interest in the Phase One Blocked Assets held by Bank of New York, and
3S
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Turnover Order directing the Rank of New York to release the Phase One Blocked Assets,
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well (\~ a brief in opposition

the Levins' motion. AJ!;o on September 13,20 10, tht:!

GrCl!nhu.lllU and Acosta Judgment Creditor,;; Wed a Cross-Motiun fol' Summary Judgment thLlt

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they possess Zl priority inlerest in the Phas~ OllC Blocked Asset:i held by Citibank tilld JP Morgan, and :noved for a Turnover Order directing those banks to release the Phase One
mucked A~sscts, as well as a hricfin opposition to the Levins' motion. On September 15,2010,

Citibank and JP Murgan Chn~e fileu ajoint brief idenlilkd as 1l "Response" to the Plainli1Ts'
Motion tor Summary Judgment. On September 24,2010, the Levins filed briefs in opposition to

the Heiser an:! the Greenb<.U1ffi and Acosta motions, and a reply in support of their original Molion for Summary JwJgmcnt. On Seplember 29.2010, oral flrgumcnt wa:s held befor..: this
Court. On O:tob~r 6,20 i 0, the Heiser Judgment Crt;uilors filed a supplclnentnl brier 'H.klfCSl'ling the validity of their writ issued by the DIstrict Court in Maryland. On OctOber 26,2010, the Bank of New York Mellon t1led a supplemental briefregartiing, the validity of the Heisl!r
Judgment Cn:tlitors' Maryland writ.

For the reasuns stated below, th0 Levins' and the Heisers' Motion$ for Partial Summary

Judgment are denied, and the Greenbaum and Acosta Third-Party Ddendants' Motion tor
Summary l11jgnH~nt and a Turnover Order is granted.

DISCUSSION

I.

Sll.mmarv JudgIDent Standard is appropriau:: if "'the pleadings, depositions, ans\vers to
~how that

Si.UlU1i11-Y judgment

il'tterrog41lorics, and admissions 011 file, together with the a1lidavits, if any,

then: j~ no

genuine Issue as to any material fact and that tho moving party is entitled to ajudgmem a;; a
matter Gflaw." FeeL R. eiv. P. 56(c). It 1:; the initial burden of a movant on sununary judgment
[Q

demunstrate lhat ther~ is no gt:muine issue of material fact. l'.1).T.C. v. Grc.ut.Am.9!lcSln Ins.

Co.:, 607 F.3d 288,292 (2d elr. 2010). When the muving party has met this initial burden, the

9

oppo!:;ing party must set forth :;pecific facts showing Ihi.1l lht!re is a genuine issue for trial, and
cannOl rest on mere allegations or denials of the facts a.sserted by the movant. Davis v. State of
Nru:~'

York, 316 F.3d 93, 100 (2d Cil'. 2002). The Court ln1.lSt "view the evidence In the light

most favora1::1e to the non-moving party, and may grant summary judgment only when nL)

reasonable lrier of fact coulLl fiml in favor ofthe non-moving party." Allen v. Coughlin, 64 f.3d 77, 79 (2d Cir. j 995). Plaintiffs Jeremy and Dr. Lucille Levin move for partial summary judgment and~.
tllIilO\l(;r order as to

Blocked Assets held at Ronk on,Jcw York, Sodete Generale, Citibank and

jp Morgan and parlial summary judgment as to third party defendant Tranian Judgment
Crcditor~~

induding the H¢lscrs and the GreenbauLlIs and Aco::;tas. The Levins assert thaI

because they have fulfilled the rcqtlircmenls of New York's collection statutes, and arc thl: iirsl
party io have served writs of execution on the New York Bankti lu obtain the Blocked Assets,
they have pn.)rity over the other Iranian Judgment Creditors. Tne T,evins also contend thaI they

are entitled tc a turnover order, because the Blocked Assets in question are subject: to execution

and include a:::cOUnlS and wire transfers that originate from Iran or its agencies or
instrumentalhies or were sent for the bcncfil urIran or its agencies or instlUmentalities. The Heiser Judgment Creditors (,<The Heisers") oppose the Levins' motion because the Levins failed to ()htain an order pursuant to 28 U.S.C. § 1610(c) authorlzing them to pursue attachmenl and t:,Xecution of the hlocked a.'l!';ets, and therefore, the Hdsers assert, the Levins

."Til':; are void. The Heisers cross-move for summary ju_dgment on the grollnds that they h\1ld a.n
unsatisfied juclgmcn! against Iran and have executed on lhe assets held by Bank of Ntw Yark properly, by cbtaining a comt order under 28 U.S"C. § 1610(c) prior to obtaining n "\-I,dt. Tht: Hciscrs acw!Jingly claim that they hold a first priority lien interest in thrt:e blocked wire

10

trans1ers at Bmlk of New York. The L~vins oppos~ the Heisers' Motion for Summary Judgment

and claim that the Heisers' writ of execution is invalid as to the Bank of New York wire transfers
because it
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issued by a Maryland Dl~trict Court and served un the Bank of New York in

M(lrylalld.
The Greenbaums and Aco:.;las oppose the Levins' motinn on the same primar), basi~ asserted by the Heisers. namely that the Levins' writs are void because the Levins lllikd to obtain an order pursuant to section 1610(c) priur to serving the writs. The GTeenbaul1l~ .and
AlU!-lla~

abo move for summary judgment und a turnov~r order in their favor on the grounds that

their writs are valid b(!C<lllSe they complied with section 1(ilO(c), and thm Ihcy therefore havt! priority to the: Phase One Assets held at Citibank and JP Morgan. The Levins oppose the Grcenbamn and Acosta motion by asserting that they were not required to obtain an order umkr

16 1O(c) in order to execute on the assets hdd by tht: New York Banks. They fmther contend that
lhis Court should use its powers to find, nunc pro

tunc, that the Levins'

WTil$

\vere in compliance

with section J610(c) at the time they ,verc delivered.
In rt!$ponse LO the Levlns' motion. Defendants and Third.Party Plaintiffs Cilibank and lP Morgan submitted a brier addressing whether the blocked asset~ sought by the pa1ties arc in fact subject to execution. The Heisers and Third Party Plaintiff Bank of New York submitted hrief~
tldtlres:-illg the validity or (he Hci,,;.:r Wrils, which were issued and served in Maryland.

Resolution of these competing c1ai illS implicates two is'sul!:); Lh~ priority of interest among the parties to the Phase One Assets and the liusceptibUity of the Phase One Assets to am.chrucnt. Because the Judgment Crditors seek to attach difft;n;nt assets, this opinion will first
"ddrcss whict urlhe parties holds a priority interest in which of the Phase One Assets. Then, the

opinion \\'i1l 3.ddres~ whether those assets arc Stlsccplibk 10 alLachment.
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The Court must firlit dClermint: whether the Levin Plaintiffs hold a priority inlerest in the

BJockd Assets hdd at the New York Banks that entitles them to turnover, or whether their

fail urI! to obtain nn order of the court pursuant to 28 U. S.C. § 161 O( c) render~ their "VlilS Vllid as
a mo.ltc(

of law.

The foreign Sovereign Immunities Act) 28 U.s.C. § 1602 el j·eq., ("PSIA") provides the ex.clusive basis Cor :wbjcct matter jurisdiction uver all civil actions against foreign state

defelldants, il-;\d governs \.hto: immunity of a foreign state in United States Courts. Saudi Arabi" ~
Ncl~gJlf 507 FS. 349,351 (1993); ~illstein v.Islamic

RepublicqfIral1, 609 F3d 43,47 (2d

elr. 2010). The t'STA pmvidcs that "where a valid judgmem has been entered against a foreign
sovcl'c:ign, property of that ion.:ign state is immune from altadum:ut and execution except as providt:d in the suhsequent sections, sectiuns 1610 and 1611. 28 U.S.c. § 1609." Wejnstein, 609 FJd at 48. One ex.ception to foreign sDvereign immunity applies where the property to he attached and executed is sought as ~ompensation for per;:;onal injury or death resulting hom an

<'let of terrori~m or the provision of material support or resources for an act of terrorism. 28
U.S.c. § 1605A. Tn such cases, property belonging to a furcrgn state. or to an agency or instrumentalhy of such state. 1s not immune from attachment in the aid of execution, or H:om

exeC·l.Il10n, upon a judgment entered by 1:1 court of the United States. 28 V.S.c. § 161 O(a). 28

u.s.c. § 1610(b).

Moreover, the Terrorism Risk rmurance Act ("TRIA"), codified nfl a note to

')/!ction 1610 of the F orcign Sovereign Inununities Act, explainS IhaI:

In every case in which a pl!rson has obtained a judgment against a terrorisl party on a claim ba.<;ed upon au act of l~rrorism, or for which a terrorist party is not immlln~ under section 1605(a)(7)2 of til It: 28, United States Code, the blocked
-~-------'--J Repe~!ed an.d replaced with 28 U.S.C.

§ 1605A.

assets of that terrorist party (including the blocked assets of allY agency or instrumentality of that terrorist party) shall be imbjeCll0 l:xcculion or altachment in aid ·:Jf exewtion in order to satisfy such judgment to the extent of any compensatory damages for which such terrorist party ha~ been adjudged liable.

TRTA § 201 (codified at 28 V.S.c. § 1610, note,)
While
~ections

161 O{a) and (b) enumerate the exceptiuns to

lOTei~rn

sovereign

immuniLy, sec lion 1610(c) cfthe fSIA describes the procedure tD be followed by
plaintif1~ sel:king

to execute or aLtach the property of a foreign sovereign or an agency or

instrumentality of a fort:.:ign sovert!ign:
No attachment or eX~clltjon referred 10 in subsections (a) and (b) of this section shall be permitted UlltiI the court has ordered such attachment and execution after having determined that a reasonable pel'iod aftime has elapsed following the entry (If judgment and the giving of any notice required under section 1608(e) of this chapTer. 28 U.S.c. § 161O(c). Tlie order referr-;;d to in 161O(c) has been found to be mandatory by a number ol'c()lIr[$ reviewing atta.chments of the assets of foreign sovereigns. See First City, Texa<; How.,ton, N.A. v. Rafidai 11 Rimk, 1n F.R.D. 250. 256 (S.o,N,Y. 2000); FerrosLaal Pacitico, 652 ):'.Supp. 420, 423 (S.D.N.Y 1987); Qadsbv
&H~nnah
M~lals

Com v. SS. Lash

v. Socialist Republic of

Romania, 698 F.supp. 483, 485 (S.D.N,Y. 1988). According to a House Report on the FSIA, 1he procedures m,mdated by 161 O(c) are in place to ensure that sufficient protection is afforded to fun:ign Slalt;s :.hal might be defendants in actions in United States Courts:
In some jurisdiction~ in the United States, attachment and execution to satisfy a judgml!llt may be had simply by applying to a clerk or a local sheriff. Thi~ would

not afford sofficient protection tn a fon:ign sta.te This subsection contemplates that the courts will exercise their discretion In permitting execution. Prior to on.h::riTl~ attachm~nt and execution, lhtl court must detemlim: (hat a reasonable period ortime hai'; elapsed following the entry ofjudgment...Tll determining whdhcr the periud has bl:i:n n:asonablc, tIll; cumb ::;hould take into aCCQunt procedure;;;, including legislation, that may b~ necessary for payment of a

judgment by a foreign state. which may take several months; representations by the foreign state of steps being taken to satisfy the judgmcril, or any stt;;pS bting taken :0 satisfy the j utlgmem; or eviuence that the foreign state is about to remove as:;;e't$ from the jurisdiction to frustrate satisfaction of the judgment H.R. Rep. No. 1487, 94t.h Cong., 2d Sess. 30, reprinted in 1976 tUL Code Congo &
Admin. Kewl'; 6604. 6629.

The Greenbaum and Acosta Judgment Creditors and the Heiser J\l.dgmcnt Creditors both
contend that the Levins' \wits of execution served on the Kew York Banks arc ifivalid because the Levins failed to comply with ~ection 161 O(c) Qfthc l"SlA. The Levins concede that they dill

not obtain1lLl order of the COurt pllr~U!im to 161 O(c) prior to serving their wIits of execution.
(Pis.' Mem. in Reply to the Greenbaum and Acosta Mem. in Opp. at 7 n.7; "IL is undispuled that the Levins dicl. not obtain a specific court order under § 1610(c) before seeking writs of ex~cution

iSl-lued by the court.") The Levins contend, however, thatlhey

wen~ no~

required to obtain an

order under section 161 O(c), first because their judgment wa..' issued pursuant to section

1605(a)(7), <IDd not section 1605A, and therefore sections 1610(a), (b), and (c) do not apply to
them TIle T.evim; also contend that they were not required to ubLain an order under section
161 O(c) because they are pursuing Blocked Assets, the attachment

or which, PlainlilTs claim, IS

governed by section 16 JO(f)( 1)(A), not 161 O(c). further. the Levins argue that they may execute under TRIA, End that sLlch executions are similarly not subject to the requirements of section 1610(c). Finally) the Levins contend that even if they were required 1;0 obtain a coUrt order prier

to obtaining and serving their 'Writs of execution, this Court should iind, mmt pro tunc, that thtl
Levins' writs '.vere in compliance with 161 O{e) at the time oftheir delivery.

14

A Section 1605(a)(7)Md Scclion 16n:;A The Levins hold a judgment issued pursuant to 28 U.s.c. 1605(a)(7)~ which 'was repealed

in 2008 and replaced by 28 U.S.C. 1605A. Sec Pub.
~;xception

t. 110-1&1. Div . .4, §1083 "Terrorism

to Immunity." 2)5 U.S.c. §§ 1610(a) and (b) enumerate the exceptions to foreign

sovereign iUlr..1unity from attachment and execution. The presently enacted sections 16\ O(a) and

(b) list actiom: brought under 1605A, actions brought for dam.ages resulting from. terrorism. as
one of the exceptions to foreign sovereign immunity. Prior to the enaClment of section 1605A.

st.:cliUml 161 O(a) anu (b)

Iisl~d

aClions bruughl under 1605 (a) (7), the predecessor statute replaced

by 1605A, as an exception to foreign sovereign i.mmunity. In both the pre-200S and the

presently enacted versions of sections 1610(a) and (b), the exception for acts of terrorism appears
li:;led III seclie·n1610(a)(7) and section 1610(b)(3). Thus, section 1605A directly replaced

section 1605(a)(7) il1 the statutory scheme governing exceptions to foreign sovereign immunity.

There are distinctions between actions brought under section 1605A and those brought under 1605(a){7). "For in~lam;c, [§ 1605A] pr..-:clude~ Ii foreign state from filing an il1t~rloculory appeal under the "collail;lral tlnld' uuclrint::, § 1605A(1), and pennits a piail1li1T to
'Illa~h

propt:rty

in advance ofjudglllent, § 160SA(g).lnaddition, § 160SA(c) abrogaLes Cicippio-Puleo v.
islamic RepubJic.gflran, 353 F.3d 1024 (D.C. eiL 2004), by creating a federal right ofacti011

against foreign states, for which punitive damages may be awarded." .simon v. RepJ,lblic of Iraq,
529 F.3d 1187, 1 t90 (D.C Cir. 2008) (reversed on alternative grolmilii, Repllbli,~ of Iran v.
13~,

119 S. Ct. 1183). The Levins claim that because their judgment was entered pursuant to section 1605(a)(7),

and not 1G05A, they wer~ not required to obtain an court ordel' pdor to executing tile Hlocked Assds h~ld by th~ Nt!w York Banks. This argufl)t!nl Cails. Section 1605(a)(7) was reptmh::d ami

lS

i'~!!iIl_ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ __

replaced by section 1605A

In

200&. Prior to 2008, section 16Hl cxpl icitly required plaintiffs

proceeding utlder section 160S{a)(7) to obtain a COliIt order prior to executing foreign a.'il\ets. 28

u.s.c. 1610((1)(7); 28 U.s.C. 1610(b)(2) (2007).

When section 1605(a)(7) was repealed and

replaced by s;;dion 1605A, Congrl!!Ss upuat~d st:cLion 1610 to incorporate section 1605A in the
place of 1605 (a)(7), There is no indication that this wa~ done lor any purpose other lhal1 to

update tJ.le statute. Plaintiffs' argument asserts that while Cor.gress intt!nded that plaintiffs
hulding judgments pursuant to section 1605(a)(7) obtain coun orders -prior
10

(he repeal of the

statute, upon replacing 160S(<:l)(7) with 1605A, CU~lgress decidt:d to relieve 1605(a)(7) judgment holders ofthis requirement, but still impose it on terrorist victims p1.u:suing judgments under 1605A. This arguIDfnl defies logic, and accordingly fails. While plaintiffs holding 1605ta)(7)
judgments do not need to convert them to 160S A judgments, such plainli1Ts must still ubtain

court orders unc1cr 161O( c:) prior Lo al1achmenl or execution. Congress's interest in affording adequate protection to foreign sovereigns by imposing the requiremem of a court order is of

ictcntiC<i1

imporla:nc~ regardless

of whether a plaintiff holds a claim under 1605(a)(7) or 160SA.

B. Section 1(j 10(1)(1 )(Al

The Levins next contend that the procedure described in section 1610(e) does not apply to
1heir execution because they seek to recover blocked a..c;;sets. Tht=y claim that the attachment and
execution oft-locked assets is governed by section 1610(f)(1)(A), and not section 161O(c).
Section 1610(f)(1)(A) providt:s: Notwil:h5tanding any otber provision oflaw... any property with respect to which financ:al transactions are prohibited or regulated pursuant to :section 5(h) of the Trading with the Enemy Act (50 App. U.S.C. 5 (b)), section 620(a) of the Foreign Assistance Act of 1961 (22 U.S.C. 2370 (a)), sections. 202 amI 203 uflht: Intermuional Emergency Economic Powers Act (50 U.s.C. 1701-1702), or any ()lher proclamation, order, regulation or license issued pursuant thereto. shall be subject to cxccu\iOIl or auachm~nt in aid or cx~clltiun of ,:my judgmenl n:laling to

16

a claim

lor whkh a foreign state (including any agency or instrumentality or such

state) claiming such proPGrty is not inunun~ under section J605(a)(7) (as in eIre.:t before' the enactment of section 1605A) or section 1605A.
2& U.S.C. § 1610(t)(1)(A).

When inltl'rpreting a statute, the "mature should be construed so that dTt!ct is given to all of its provisions, so that no part will be inoperative or superfluous. void or insignificant. " Cor! ey
Y.

United Stt1.tes, 129 S. Ct 1558, 1566 (2009). The Levin:; contend that section 161 O(t)(l )(A)
l:SG<lp~ the requirements of 161 O(c) despite the fact that their

permits them to

1605(a)(7) c{;.:Iim

was specifically subjected to 1610(c)'s requirements in lhe pre-2008 statutory language. Reading

:;;t:ction 1610(:)( 1)(1\) in l11e light of the other subsection:; of section 1610, a.s the Court: is
required to do. cstablishus thallhe Levins remain subject \0 the requirement of section t610(1;),
de~pjte

the fact that they seek to atlach blocked assets. 1610(c) states that "no attaclunent or

executiQn referred to in sections (a) ~)r (b)

or this section shall be permitted until after the court

ha,..'; ordered sllch attachment and execntion"." As discussed above, sections \ 61 O(a) and
161 O(b) did, in fact, refer to attachments Or executions pursuant to s(;clion 1605(a)(7) prior to the
repeal of sectinn 1605(a)(7). Seetio!! 1610(i)(1)(A) merely establishes thatas::.elo; blocked

pursuant

\.0

regulatory prohibitions on tinancial \r<.msactions are available for executi{)n of any

Judgment brought under section 1605(a){7) or 1605A. Tbe fact that section 1610(1)(1 )A) rerer~

to 1605(a)(7) and 1605A indicates that 1610(1)(1 )(A) is not itself a stand-alone exception tn
sQvcrci~n immunity, but rather a section targeting the proce:;::; of executing on l.'IS!:icl$ u .....'Il~d by

foreign governments. Section 161 O(f)(l )(A) in no way expressly overrides or eliminates the procedural rcquirCl11tnlJ:; of section 1610(c), and therefore Sll{)uld not be interpreted to do so.
Sel:tion 1G OC)( 1)(A) cxplain:s that plaimil1s wilh ch\ims under 1605(a)(7) 1
Or

1605A can

17

proceed to attach or execute blocke:d assets, as well as other assets held by a sovereign or an
agency or instrumentality of a sovereign, provided that they fulfill the requirements of section

1610(c). Thm, Plaintiffs' second argumcmfails,J

The L¢VlllS further contend that section 1610(c) does not apply to them because they are

:;eeking a lurnover of blocked assets under TRIA, which I;;; not listed in section 1610(a) or (b)
and therefore is not subject to the requirements of 1610(c). TIli:. argument fails for the same reason as Plaintiffs' foregoing argument regarding 1610(f)(1)(A). TRIA is codified as a note to
section) 61 0, and must be read in the context of the overarching statutory scheme of the 1~·SIA.

Padilla v. Rumsfeld, 352 F.3d 695, 721 (2d Cir.2003) ("No acc~pte:d canon llfslatutory interpretation permits 'placement' to trump text, cspcciaUy whcre, as here, the text is clear and

Our reading ofit is full)' supported by the legislative history.") To reiterate, sectinn 161 O(c),
both its present and prc 2008 incarnations. clcl1rly slates Ihloll "no executl0n or altachmt:nl
R

1!1

r/!lerred to in subsections (a) and {b) 01'1h1s section shall be penniued" without a courL ()n.lcr. 2&

u.s.c. § 161C(c) (emphasis added).

TRiA docs not invalidate 01 override section 1610(c), and

does not erase the reference to section 1605(/.1)(7) in the pre-ZOOS versions of 161 O(a) and (b) or the referencc to 1605A in the updated version of the statute. There is no indication in the rext of TRIA or 1610 that TRIA was intended to eliminate 16LO(c)'s court order requirement in the

). At oral argurne it. the Heisers >llld the Acosta,. and Greenbaums asserted that section 1G1O(f)( 1)(A) had bt~n w;liv::d by President Clinton, and was rherefore imlpplic:lole. Te ofO(a1 Argument. September 19,1010 lit 31::23· 35:24; 46:2047: 16. The Levins contended that TRIA, at §2{)) (h), impo!:ed a requirement un Presiuenli.al waivers of c)(ception~ lo im 1\unity from attachment or cxccuLitlo Ihal Lhe Pn;,icicnt waive t:xct::plion~ tu immunily on all a5~el by l>.",xcl ba,,':;. ar,ulhiil thcrcfon: ~cc!j()n 1610(O(l)(A) Co nul subject lO!l blanket wuivcr. It U{)!,):; tippenr from a rellding ufTRIA tnallhc Prcsitlcnl i:i now n:quircd Iu i~::;ll<': WUiV(;fl; on l.Ul W!:icl by H5:.cl bl1~is. lmJ sw.:!. wuiv\!rs IHWC nOl b~CI) is~ucd with rcs,urd to Ih~ assels in qucsthmllel'c. However, even if$cc\loll 1610(f)(1}(A) <lppJi.:s with full force, i! does not excuse the Levins fiom compli;mce with section 1610(c), as discussed herein.

lR

context of terrorist 3.sse1s, ar,d no evidence that Congress inttmded for TRiA to tmmp section
1610. \Vhilc the Levins are pursuing atrachmenr under TRIA, their judgment against han was obtained via the exception to sovereign immunity found at 1605(a)(7), nm in TRIA. Therefore,

they remain subject to (hc rcquin;rncnt~ of 161 O(c), ::mel, since they are not in compliance, their writs are inva;id.

D.

lli.n.c fro Tunc

Finally, the Levins urge the Court to find, nunc pro tunc, that thtl Levimi' Writs were in complia1l..:e with 161 O(c) at lhe
Lim~

of their dt:livery to the U.S. Marshal on June 19,2010.

"A nunc pro tunc order is granted only

in extreme cases, when 'a court ha~ spem an

undue amount of lime deliberating and thereby has caused the parties prejudice or harm. '"

Hegna v. Ishu:n.ic Republic of Iran, 380 FJd 1000, 1008 (7th Cit. 2004) (citing Transilmerica Ins.
Co. v. South, 975 li,2d 321, 326 at n.2 (7th CiL1992)). The purpose of a nunc pro tunc order is to
correct the record, 110t to alter substantive rights. 1d. ~lmc pro tunc orders are a fonn of

equitable relief, Zhan:;;: v. Ho!der, 617 F.3d 650, 652 (2d Cir. 2010). and as such, this Court

l:Om:t;ffi8 itself ,villi fairness in determining whether such an order is w(lrmllted. SEC v,
Management DyUamics. Inc., 515 F.2d 801,808 (2d Cir. 1975) (explaining that considerations of faimess are the traditional concern of equity courts.)

Thi:> Clltlrt declines to find nunc pro tunc that the Lcvi:ns' writs were in compliance with 161 D(c)
<:It

the: time of their licllvcry to the U.S. Marshal. The priurity ofintL'7t:sls amung the

Levins, the Greenball"m and Acostas and the ITeisers is disputed, and in light of the competing interests, it wc,uld bt! inequitable to award a nunc pro tW1C order and thereby entitle The Levins to
n.:covcry of the (lSscls when they failed to comply willi !..he statutory mandate of section 161 O(c).

19

The tl;:vln~' writs of execution were served 011 the New York Banks without previouslv
obtaining a cr..uti order pem1itting such execution as is required under 28 U.S.C. § 161 O(c). '~'hc Levins' writs are therefore invalid, and any \\-Tits served by them without such an order cannot
\.:!ilabli$h theil priurity or inlL"Tesl UW! ,my parly thal has ~erved a valid, coul1-orden::d wri [ and

thereby executed or attached the Blocked Assets.

E. Vclidity ofthe Heisers' Maryland issued Writ
Having fonnd the Levins' writs to be invalid, the Courl will noxl r.:on;;ider the Heiser Judgment Creditors' writs, the validity 01' which remains in doubt hecau~e they were is;;ued by the United Stutes District Court for the District of Maryland and served on the Bank of New

York in Maryland. The Heisers obtained a defallltjudgment on December 22: 2006, in the amount of
$254,431,903 in the United StGtes District Court for the District of Columbia. EsUlte ofH~iscr v, Islamic Republic gfTran, 466 F.Supp.2d 229, 356 (D.D.C. 2006). The D,C. judlimcnt was registered with the Unit(;ld Slates and with the United
Slate~ Di~lrict

CourL for the District of Maryland on August 27, 2008,

District Court for the Southern District of New York on Septemher l\,

2(}08. (Nevling Supp. Dec., Ex. 1,2). The Reisen; then obtllineri a modified judgment under 28 U.S.C.
~

1605.40 on September 30, 2009, that increased their total recovery to $591,089,956.

(Nevling Supp. Dec., Ex, 3.) The Heisen; have not registered the modified judgment in

Mal'yland or Nevv York ftrlc1 have sought to entorce their odgiaal Judgment
On Februuy 7, 2008, the D.C. District Court issued an order pursuant to 28 U.s.C. § 161 O(c)

permitting the Heiser Judgmen1 Creditors to pursue attachment in aid 0 f execution of the
December 2006 judgmcnt. On April 30,2010, the Heiser!; obtained a writ of garni~hment fi-nm
the District Court for the District of Maryland and served this "wit on the Bank of New York in

20

Maryland on VJay 3, 2010. (Ncvting Supp. Dec., Ex 4.) Bank of New York served the l-lciscrs

with a third-party complaint, and the Helsers filed their amended answer on July 6,2010. The Bank of New York contends that the Heiser's -writ is invalid, because the Heisel's'

right to cntorcc their judgment is governed by the law of New York State. According to the
Bank orNew York, New Yurk law applies the separate entity rule, whi\,;h, in Ihis case, would reqUIre the H~isers to iierve Bank afNew York in New York, rather than in Maryland. The Hciscrs respond that the Blocked EFTs are intangibles \\-'lIh a situs in the Unlled Stales, and that

therefore the Heisers may purslIc aHacluncnlm any jurisuictiun in whir.;h LhL; Bank uLt\(.:w York is subject to jurisdiction. The Heisers also contend that the attachment proceeding is governed
by ~ryland Jaw, and not '!\few York law as the banks assert.
1. Choice of I.aw

In ordt:r Le· delennine whether the l1eisers' service of -writs of garnishment on the Dank of
New York in \1aryland WDS valid, the Court must tirst determine what law governs this dispute. Thls analysis hingt::s on wheLher the issue is procedural or substantive.
H~isers

The dispute between the

and tr.tl Bank oCNew York reg"trus whether the lIeisen:i' Maryland-issued \\'Iits of

execution reach bloc.ked wire tmnsfers that, the Bank of New York asserts, contain funds
t:urrenlly held in
aC(:OtU1ts

located in New York, ma,naged by employee5 who

art:

based in New

York. (Hall Dec. I! 3, Ex. A.) This issue therefore involves que;:;.tioms of attachment procedurcj
wh~lht:r

a wrj-,. uf t!xt!t:ulion i:>sueu and served in one slate Gin reach ~sets held in another Sla\c.

"The FSIA states that \\ihen a ioreign state is not protected by sovereign immunity, 'the foreign slate shaH be liabk in th~
Sfime

manner and to the same extent as a private individual

under like circumstances.' 28G.S.C. § 1606. In attachment actions involving foreign states,

federal courts thus a.pply fed. R. Civ. P. 69(a), which requires the application of local state
21

procedures."

Kari':lQ~. Boda~

Cn .. JJ.c. v. Persusilha(1n PClirunba.rJ.gan Minvak Dan Ga.s

Bumi

Ne)!ara, 313 F .3d 70,83 (2d eir. 2002). Sec Alliance Bond FundI Inc. v, Gmpo Mexicano Dc Desarrollo. S,A" 190 F.3d 16,20 (2d Cir.I999) (applying Rule 69(a), and henct Nt:w Yurk law, in an FSIA action). Federal Rule of Civil Procedure 69(3) states, in pertinent part: A money judgmel1t is enrorc~d. by a wTlt of execution, unless the court directs otherwise. The procedure on execution - and in proceedings supplementary to and in aid ofjudgment or execution - must accord with the procedure of the stale where the coun is located, but a federal statute governs to the extent it applies.

~ed.

R. Civ. P. 69(a).

Thus, "Rule 69(a) provides that in the absence of an applicable !t:deral statute

th~

procedure in supplementary proceedings to execute a fedt!ral court's judgment shall be thai uf the

rorum ~tate." ge~olution Trust Con. v. Rugcicro, 994 F,2d 1221, 1226 (7th ell. 1993).
The Heisers contend that the application oftrus rule results in Maryland law "govem[ing] Lhe procedures for executing upon property of a Judgment debt()f for actions instituted out ofthe Maryland Com1:' (l-Jeiser's Stipp\. Mem. of Law
Di~Lrict
<:It

6.) \VbHe the wTit was issued by the u.S.

Cuurt of Maryland, in lhis matter the Heisers are applying fOl' a turnover order from this
<1

Court in the Southern District of New York. This proceeding is thererore

:supplemental

proceeding in aid ofjudgment or execution, and this Court is thus bound to apply the attachmeOI
procedures of the stat\; where it is located; New York. 2. T11e Separate Entity Doctrine Under New York law, "lhe separate entity lule dictates that each 'branch of a bank be treated as a separate entity for atlachmt:nl purposes. '" Allied Maritime. Ins:. v. DesgR:ltail.~. S.A., 620 FJd 70, 74 (2d Cir, 2010) (quoting ~cre.cnskc Dampskibs.sdskab v. SabrI! Shipping Corp.,

22

341 F.2d SOt 53 (2d Cir. 1965)), This means that "the ml.:re fad thal a bank may haw.: a bnm<.:h
within la slawJis insufficient to render account:; outside of [that stateJsubject to attachment:'

Allied Maritime, 620 F.3d at 74. (quoting John Wiley &. Sons, Inc .· v. Kirtsaeng. No. 08 Civ.
7834,2009 WL 3003242 at *3 (S.D.N.V. Sept. 15,2009).

Following this doctrine, servIce of a writ of altacimleut on the Bank of New York's

Maryland bra:.1ch is not sufficient to attach assets residing in aCCOluits in New York State. Bank
of New York has demonstrated that the Blocked Assets the Heif>ers seek are maintained in
accoliDB local.cd in New Yurk, managed by empluyee:> who an:: based in New York. (Hall
~: 3, Ex.
DCL:.

A.) Therefore, the Hcisers caIUlot demonstrate their entitlement to a turnover order

issuing from thi::; courl on the basis of their Maryland \\-Tit of attachment, and their motion for
::iuch order is dtmied.

F. nle Grt!t:nballm and AC08W Wrils
As discussed, the ~Tits of execution served on the Nl!:w York. Bank.s by the Levins ::md
the Heisers ar-;'l invalid for the reas(m::; staled.ll1e Greenhaum and Acosta creditors served wl'its

of execution (·n Citlbank and IP \!forgan in New Y()rk, ali.c;r having obtained a courL orclr;[ in this
Di:>triCL pursuanL to 28 U.S. C. 161 O( c) penJlitting them to
pro~eed

with their ext:cutions

(Greenbaum and Acosta Mem. in Opp. at 8.) The only other group that has attached and
executed agai'J.St the Phas.: One Assds art: the Rubinjudgmen! creditors, who; like the Ll;:vins, have not obtained court order under 28 U.S.c. 1610(c). Tn addition, the Rllbins did not pcrf~ct their levy within 90 days of ~'Tvicc.

Therefore. the Greenbaum and Acosta creditors hold a priority interest in the Phase One
A;.;::;el::; held at CiLibank and J1' Morgan.

23

I)

111.

Attachment of the Phase Dne tAssels Hgld at Cit-thank and J P Morgan

In order to determine whether a turnover order can be issued as to the assets held at

Citibank und JP Morgan that art'!- stmghr by the Greenbaum and Acostl1judgrncnt creditors, the
Court must fir::il ddermine whether thesb assds are sLlbJ~cl10 allachmenl.
The CJibank and .lP Morgan Phase One Assets include accounts and cic:ctroruc fund

transfers ("EFT$") that have been frozen by the Office of Foreign Asset Control ("OF AC"). In
this case, the assets were blocked by OFAC du¢ to a.n apparent nexus with the Islamic l<epuhlic ofIran, or an agency or instrumentality of the Iranian government ~ Smith DecL, Ex. 1.) Iran is rhe subject of numerOllS sanctions and blocking programs. 3] C.j-' ,R. Parts 535, 544. 560,

594-597;

also Bank of New York v. Rubin, 484 FJd 149; In re Republic of Iran Terrorism

Litigation, 659 F.Supp. 2d 31, 36 n.1 (0, D.C. 2009), Pursuant to the International Emergency Econornic Powers Act (50 U.s.C. § [701., 1702'1.

variou:s Prtlsidenrs have iSl:>ued Executive Orders for the purp~lse ofblodJog transactions wilh

Iran. 4 Pursuant to th::se Executive Orders. OF/\C administers several sanctions schemes
regulating the asseL~ uf t~rrolisl::; and staL\,; sponsur!:! of lcrrori:sm, as well
proliferator~
<is

assuts linked

to

o.fweapon::; of mass de:;truction C'WMD") and their supporter,;;. (Campi. at -:r 36.)

Such entities are designated by O[7AC and placed on OfAC's list of "Specially Designated Nationals" ("SDNs") (Comp1. at ~ 37,) SDNs are defined as "individuals and entities which are owned or control1ed by, or acting for or on behalf of, the goverrunents of target \.:Quntric$ Qr ,-tn;
, Thes~ Ord~rs include: Exec.ui\'i: O~der No. 12947, 60 fed. Reg. 5079 (January 23, 1995) (pmhiblling TmllS;'lClions will) Ten'orislS Who Threalen m Disrupt the Middle East Peace PrOCESS)~ ExecutiVI1! Qrd\;T No. 13099, 63 Fed. !leg. 45167 (August 20, 1995) (a.mending E:..et; Order f 21147); F.xeeutive Order 13224,66 Fed, Rcg_ 49079 (S'<lpwmhcr 23,1001) (Blocking Property and Pwr.ibi,ing TnmslicLhms wilh Pcr);onl' Wh(l Commit, ThrCllli::1I to Commit or Sup?,.ul Tctrori5m). (CnmpL III ~ 33.) On June 2ll, 2005, the Prc.iu;.:nllibu i"su..:d Ex.::cutiv<: Order No. 13382, 7'.1 FctL R(.;g. 38567. (Blocking Pruperly of Wcnpons of Muss Des\ruction Pn)liferato(s and 'flleir Supporter.». (C~'mpl. at ~ 34.)

24

associated with international ... tcrronsm."

S(:l~

United States Treaiiury Website,

hUn:JJW'ww. treasllrv. gov/re!;.ource~centeI/sanct ions/S DN-r.istIP a~sl de faul t. aspx.

Rule 69 of the Federal Rules ufCivii Procedure designates ~tat.e law procedure tor the
cnfl..)rcement of a judgment as the approprinte procedure, subJt:ct to any governing law. Fed.
CIV. P. 69. Tle Greenbal.lm "mtl Acosta Judgment Creditors therefore seek turnover order:;
l{.

pursuant to i\ew York Civil Practice Law and Rules ("CPLR") § 5225(b). CPLR § 5225(b)
stalt!!'i:
Upon.l ~pecial proceeding comnH;m.:L.:U by the judgment creditor, against a person in possession or custody of money or other personal property in which lhu judgm'!!l1l debtor has an interest" or against a person who is a transferee of money or other personal property from the judgment debtor, where it is shown thallh~ judgmcnt debtor is entitled to the possession of such property Or that the judgment creditor's rights to the properly are superior to those of the transferee, the court shall require ~uch per50n to pay the muney, or so much ofll as 1S sufficient. to satisfy the .i tHlgmellt. to the judgment creditor, and if the amount to b~ so paid is insufficient to satisfy the judgment, to dt:hver any other personal property, or so much of it as is of suftldent value to sOlisfy the judgment, to t\ de~ignaled sheriff.

CPLR § 5225tb).
1n ordt!r to issue a turnover onlJ.:T in ravor of the Greenbaums and Acostas as to the

Citibank and JP Morgan

Pha~e

One Assets, this Court must fir:it determine that the as~ets an::

subjt:ct to attachment under governing law, and that the record establishes the Greenbaum and Acosta j Lldgment Creditors' entitlement to a tumover order under § 5225(h)_ Due to the Second
Circuit pn:ccd~nl $pl!cifically addressing the attachment of electronic fLUId transfers ("EFTs"),
~ Shipping Corp. ofIndia Ltd. v. Jaldhi Overseas Pte Ltd., 585 P.3d 58 (2d Cir. 2009); Rxport-

ImQort Bank of the U.S. v. Asia Pulp & Paper Co, Ltd.. 609 F.3d 111 (2d CiT. 2010), this
opinion will first address the intercepted EFTs, and then discuss the Citlhank deposH account.s.

25

A.

The Wire Transfers

The Pha::;e One Assets held at Citibank and lP Morgan primarily consist of the proceeds

of blocked EFTs currently held in interest bearing aC(:l>Unls, as required by law. (Smith Decl.,
Fxs. 8-12.). Citibank holds lh~ proceeds of One EfT in the amount of~ssocillted with
the

(Smith Oed., Ex. 12) JP Morgan holds
associated w i t h _ .

lhtl

proceeds one EfT in the

amount

<l!i)

In their joini response Memorandum orLaw illld at oral argument, Citibank and lP

Morgan suggest that under the applicable Second Circuit precedent and state law, til..:::>'.:
intercepted EFTs are not the property of the originalor or the beneficiary, and therefore arc not

susceptible to att.."lchmcnt. (Ci1ibank and iP Morgan's Joint Response Mem. ofL. at 15-17.)
Two recent Second Circuit rkcision!), Shi'Oping Corp. OfIn.9i(il..-td. v. Jaldhi Overseas Ple 585 F.3d 5R (2d Cir, 2009). cert. dcni~, 130 S. CL : 896 (2010) C'Jaldhr~) and Asia Pulp &1:apcr Co .. Ltd., 609 FJd III (2d Cif. 2010) ("Asia Pulp"), address the issue of whether EFTs residing at intcnnediary banks in the United States can be attached. Jaldhi involved the attachment ofpropcrty under Rule B oftbe Admir...uty Rules. In that

case, the Coun found that in order to attach EFTs under Rult: B, the attachment must be of
"tMgible or ir:tallgible property" that is "the defendant's." Jaldhi, 585 F.3d at 66. In order t()
determine whether the property interest held hy the defendant was adequate to render the property "the dcfcmlanl's," ~:i n.:quircd by Rule B, the Court looked to state law, concluding that
becau.'l~

"there is no federal maritime law to guide our decision, we generally louk. to stale bw 10

determine property rights." ld. at 70. The Court applied New York's V.C.C. Article 4 to
in the llilme o~ and (3) an aCCollnt conttlining

(2) U\ account conrain in tile ll111tlC_

26

,j

!

dctt:nnine wllcther EFTs can be conside~d (he defenc1am's property. Id. The Courl1hund timt New '(ork SIaH~ law does not permit the attachment o[ EFTs that are in the possession of Gln

mtermediary bank.

rd. The Court further found that under New York 1mv, "a beneficiary has no

property interest in an EFT because 'until until the funU$ trJ.I1ster is completed by ac.:ceptance by
Lh.~

beneficiary's bank of a payment order for the benefit or (h~ beneficiary, the beneficiary ha,:.;

no propen:y interest in the funds transfer which the b~neficiary's creditor ca." reach. '" Id. at 71
(quoting ~.Y. LJ.C.C. § 4-A-502 cmL 4.) The COUli concluded that "[b]ecause EFTs in the temporary pcsscssion of an intermediary brulk an~ not property of either th~ origina.tor or the
beneficiary under New York law, t.iey cannot be subject to attachment under Rule 13." Id.

A!\iablli! addressed the issue of whether an EFT In the possession of <'Hl intermedlary
bank could be garnished und~r lb.\: Federal Debt CollectIon Procedures Act C'FlJCPA") tll salisfy judgment dcblS owed by either the originaLor or benefidary. 609 F 3d at 1 14-115. The Court in Asia Pulp found that "Jaldhi instructs that whether or not midstream EFl's .ffi.'1Y be attached
Or

seized depends upon the nature and wording of the statute pursuant to ""hieh attachment or
seizure is sCl.l.ght."

til

at 116. The Asi5: Pulp court then went on to exami no the FDCPA, and

found that lhe statute authorized the "issuance of writs of garnishment to any person ;in possession, custody or control' of property 'in which the debtor has a fmbstantial nonexempt inrerest. ", ld. The Court then proceeded in a t\'v'o-step inquiry; first, louking to state law lo ~ee what intere.:;t the debtor has in the property that the debt collector l'eeks to rcaGh, and second., looking to federal law, tlaIDdy the FDCPA. to see if these intt!Tests are "substantial iIlt\.:rcst~" su<.:h that would allow garni$hment. Id. at 118. Tn the first ::ilep of the analysis, the Cotln n:a-.;hed

the same conclusion as the .lflldhi court, and found that under Nc;w York state bw. mid-stream
EFTs. are neither the property of the originator or the bcneficiary- Jd. at 120. 27

Judge Marrero of this Districl recently is::lued a decision addressing the attachment of EFTs in the ,:ontcxt ofTRlA. Hausler v. JP Mor£:an Ch~sl! Bank, N.1\., No. 09 Civ. 10289,2010

WI, 38] 7546 (Sept 13,2010). The Court in Hausler found that TRIA and the underlying fcdcntl janctions regulations (the Cuban Asset Control Regulations, or "CACRs"), considered together,
preempted
~wte

property law, and therefore the Court did not apply N.Y. U.c.c. Altide 4 as had

the Courts in

~ and

Asia Pult;!.

rd.

at *4-*12. The:: Hausler Court found that TRL"\, in
<lSSl::l"

conjunction with the CACRs, preempt state law because TRiA explicitly detlul:!.,> "hlocked

as "any asset scu\.:u or frozen by the United Stales under [§ 5(b)J of the [Trading With the
Enemy Act ("TWEN')] or under sections 202 and 203 of the [Intemational Emergency
Economic Powers Act]." TRIA § 201 (d)(2). The Hausler court concluded that because the

CACRs were

~nacted

under § 5(b) of TWEA they should be considered in tandem with TRIA to

ddermine whether lhl: wire transfers were attachable. Id. at "'6. In considering both together, the
COUlt concluded that

federal law comprehensively addressed property rights in this context, and

therefore preempted state law: For dr::caues prior to the passage of TRIA, OF AC regulations have TOuti Ilciy includ¢d both properly and intereSTS in property among the asset<; authorized 10 be blocked. Sec, ~., } t C.F.R. § 575.201 (Iraq): 31 C.F.R. § 535.201 (Iran); 31 C.F.R. § 537.201 (Burma). Therefore, when drafting TRlA, Congress wa..t; presumably aware of the types of assets blocked under OFAC regulations ... As noted above, TRIA § 201(d)(2) defines "blocked assets" to include all assets blocked under the CACRs., and without further direction from Congress excepting inti;:re~ts in property from the blocked assets suhject to l.:xecution, the Court is not persuaded that the word "of' equates to actual owntlrship or title and thus would operate to so limillhe blocked a,<isets subject I() turnover proceedings. rd. at *7. The Court in Hau:>1er

fmmd further support for its position in the Supreme Court's

decision in Ministry nfDefctlsc and Support fqr the Armed Furces of the rslamic Republic uf

28

d

fran v. Elahi, 129 S. Ct 1732, 1739 (2009). In Elahi, the Court was considering whether an arbitral judgment awarded to Iran constituted a "blocked asset" subject to execution under TRlA In making its ruling in
a~

"the Court considered whether Iran had an 'interest in the property'

requ(red by the relevant OFAC reb,'Ulations." ffaw;!er, 2010 Wt 31H7546 at *8. Similarly, in

A~.i;tPulp. the Second Circuit held that "Jaldhi instructs that whether or not midstream EFTs may

be attached or !iei7.ed depends upon the nature and wording of the staUlte pursuant to which
attachment or seizure is sought." Asia Pulp, 609 F .3d 111 at 116. In this case, Plaintiffs are seeking attachment or :.ci;.;:un; pm~uant to TRIA and 28 U.S.c.

§ J610(f)(I)(A).

TRIA stqtes that
l\'otw1thst~tl1ding any other provision of law .. .in evelY ca.')e in which a person has obtained a judgment against a terrorist party on a claim based upon an act of tcrrori.sm, or for which a terrorist part)' is nut immune Wider section 1605(a)(7) of title 2R, United Stat.:;;; Code, the blocked assets of that terrorist party (including the bl(lci<.cd assets ()f any agency or instrum~ntality of that terrorist part y) !thall be subject to execution or attachment in aid of execution in order to sati~fy such judgment to the extent of any compensatory damages for which such It::ITurbt party has been adjudged liahle.

TRIA § 201 (a).
TR1A defines "terrorist party" to mean "a ierrorist. a terrorist organization
(35

del1ned in secdon 212(a)(3)(R)(vi) nfthe Immig,rationand Nationality Act (8 U.S.C.

IlR2(a)(3)(B):vi)), Or a ror~ign S[::Ile designated as a state sponsor of terrorism under
s~ction

6U) of the Export Administration Act of 1979 (50 U.S.C. App. 24050) or section

6:20A of the FureignA:sslstance Act of 1961 (22 U.S.C. 2371)." TRIA § 20 1(d)(4). iran

was designated as a state sponsor oftcrronsm under the Export Administration Acr of
1979, and therefore is a terrorist party wllhiIl the meaning of TRIA. Sec 49 Fed. Reg.

29

- - - - - - - ,_ _ _ _ _ _ _ _ _ _

"iJ:~

2836-02 (JaL 23, 1984) (notice of Secretary of SLate George P. Schulz, designaLing Iran
as a state spnnsor oftcrrorisrn).

TRIA. then goes on Lu ddine blocked assets as. in pertinent part. "(A) any asset

sciv.:d ur [r02en by the United States uIlder sl.:clion 5(b) of the Trading With the: En.::rny
Act (50 U.S.C. App. 5(b) or under sections 202 ur 203 of the International Emergency

Powers Act (50 II S.c. 170 I; 1702)."
The language ofIRlA is broad, subjecting any a,l'sel to execution that is se17.d or fro:lcn
plIfsmml to the applicable sanctions schemes. The breadth of tl1is language i:s unsurpTising in

light ofTRIA.'s remedial purpo.se. Hausler, 2010 WL 3817546 at "'9. SenZltor Tom Harkin, II sponsor of the Act, stated the following prior to the law's passage:
TIle purpose of (TRIA] is; to deal ;;{)mprehen$iv(t~y with the problem

of

enforcement ofjudgmcms issueu to victims of terrorism is any U.S. cuurl by enahling them to satisfy t.iuchjudgmcnts from the frozen assets ofte.rrorist panics, As the conference committee stated, tRIA establishe.:i, once and for aU, that such judgments are to be enforced against any ,i.:;sets available in the U.S. and that U1C execu:ive branch has no statutory authority to defeat such enforcement under standard judicial processes, except as expressly provided in this act 148 Cung. Rec. Sl152R (daily ed. Nov. 19,2002) (emphasis added),

As Judge Marrero observed in !:laulser, TRIA's definition of ' 'blocked assels"

Jdines which assets are subject to attachment by reference to the regutations p\lrs.uant to
which the ass.~ts aTl;: blocked, and it is thi~ definition that dictall:!s what interest in property subjects aJud:~ment debtor':; property to attachment. Hi'l\lsler, 2010 WL 3817546 at ·5.
Therefore, in order 10 delennine whether the Phase One Assets held at Citibank and JP

Morgan are Ru~iect to attachment, the regulations
assets must be considered.

impo~)ng the

sanctions on Iranian

30

Transactions

involvin~

Iranian assets arc block(.;t\ pursllant to a series of regulations,

including 31 C.F.R. § 535, 544, 560, 594-597. 31 C.F.R. § 544, underlies the scheme governing Weapons ofMas$ Destruction CWMD") Proliferators Sanctions, and serve:-; to effectuate
ExecLltive Od.er 13382, which Jret:z~5 assets ofproliferators.

6

Under 31 C.F.R. § 544.201, "all property ami interests in property that are in the United

States, that hereafter come within the United States, or that arc or hereafter come within the possession or control of U.S.
per~ons,

including their overseas branches, of the following persons
lh<lt

are blocked." The n.:gulaLion then goes on to explain

any entity engaged in the proliferatioll

of \veapons of mass destruction is included in the list of "persons" whose property interests arc

blocked. Seclion 544.305 defines an "interest in property," as referred to in section 544.201, as

"an interest

0: any nature whatsoever. dlJ'cct or indin.:cl." ILl.

Another sanctions scheme blocking Iranian assets is the series ot'TerTlJri::;m Sanctions
Regulations fi)und at 31 c.P.R. 595. These regulations block transactions "in propel1y or

interests in prJpcrty of specialiy designated terroristls)," 31 C.F.R.595.201. The regulation

then defines what constitutes (111 interest in property identically to the non-pro1iferarion
"an m1eresl of any nature whatsoever, direct or indirect." 31 C.F.R. 595.307.

~anctions;

Thus, pursuant to either the proliferation or terrorist sanctions scheme, any fircrest in
property, of any nature, whatsoever, direct or indirect held by any ofthe Iranian entities linked
TO

the Phage One

a~sets,

is blocked. This dclinilion of what constitutes a "propelty interesC is

substantially broader than that found under New York law, and cvim~es a congressional intent to

blocT<: even pn)perty in which a terrorist entity has only il limited interest. Unlike Maritimt: Rule
.; Several ofthe entities linked to l!w Phuse One Assds, namely _ . .' b~.ve been designated ":$$ WMD prolifemtors. of Non-Proliferation S::mciions, available at UTI,,:!/wwwJ!}":};/i!!!y,goviresource-cen!er/sanClill!ls/P ro t!L!!r.n~1.1 )o.cumen t!:!irll!'l: p~f.

31

.,

B in Jaldhi,

(If

the FDCPA in Asia Pul12, here federal law is not silent on what intere::;t ill ptoperty

would subject the assets to attachment. The property interest required for a terrQrist party's I.\s:;et5 to be blocked under iliese schemes is "any interest of any nature whatsoever."
Accordingly, the Court finds thal TRIA and the applicable ::ii:t1lctions regulatlt)n~ "establish a

comprehtmsh1e statutory scheme that eschl;:ws any need for consideratiull of state dcfinilio!1<; of
property." H1usler. 2010 WL 3817546 at *6. Therefore, the Jaldhi rule regarding .EFTs doeii not apply.

Moreover, $cction 161 O( f)( 1)(A) of the FSIA contains language very simill1f tu thal of
TRIA, and provides fuIthel' i udications that Congress intended for all blocked assets in which terrorist entities have an interest to be available for attachment by plaintiffs bolding valid
judgments, Section 1610(1)(1)(A) states:
Not\Vith~l.anding any other provIsion orlaw... any pmpelty with respect to which financial transactions arc prohibited orregulated pursuant to section 5(b) of the Trading with the Enemy Act (50 UB.C. App. 5(b)), st!'ctioo 620(a) of the Foreign Assistance Act of 1961 (22 U.S.C. 2370(a»), sections 202 and 203 of the Jmemational Emergency Economic PowerS Act (50 U,S.c. )701·1702). or any other proclamation, ord¢r, regulation, or license issued pursuant thereto, shall b~ subject to execution or attachm~nt in aid of c.xecution of any juc.lgment relatIng to a claim for which a foreign state (illc1uding any agency or Instmmentality or :5uch state) (;laiming such property is not immune under section 1605(a)(7) (as in effect before the enactment of section 1605A) or 160SA.

28 C.S.C. § 1610(1)(1)(A)
Even il'tht:: blocked EFTs were not subject to attachment under TRIA, they are included in the calegor:r of assets ::;~clion 161O(f)(1)(A) subjects to auachrnent. The :'\latute states that

"any property" with respect to which transactions are prohibited. or even regulated, is subject to
execution Or attachment in aid of execution ofj ltdgments against state sponsors o[krrur. 28

u.s.c, § 1610(0(1 )(A).

All of the Phase One Asset.ii constitute property with respect to which

32

linandal transactions nrc prohibited. Unlike TRTA, there is no "ofthe terrnn::;t party" language in I'ection 1610(f)(1 )(A), clarifying Congress's intent to make blocked assets, regardless of whether they are owned in entirety by lelT(lTist parties, available to victims oftcrrorism.

It is plainly the intention of TRIA and the 1-'S lA tu make blocked a'5sets available to

plaintiffs. As Asia \lulI:! slates, "whether Or not midstream EFTs may be attached or seizeu
depends upon the natur~ and wording of the statute pursuant to which attachment Or Sei7.tlfe is soughL" ~sia Pulp, 609 F.3d 111 at 116. The nature and wording oITRIA and FSIA section

161 O(f)( I)(A) indicate that Congress intended all blocked assets be available for attacl:unl:nl by
victims of tenor. This Court concurs with the Hausler COU!llhat in drafting TRIA <ll1d 1610(1)(1 )(A), Congress was aware of the types of assets that are blocked under the applicable regulations, and therefore understood that by wording the :statutes so broadly, it was subj!.:l'ling all such asset') to \':xr;:cution. If Congress had wished to exclude EFTs from the variety of assets ;:;lIbject to attaclmlent, it could have done so. Instead, TRIA and the FSIA employ ianguage subjecling any blocked assets to attachment in these circumstances.

Based on this Court':; rr;:ading of TRIA, sectIon 161 0(£)(1 )(i\.) and the applicable
sanctions regulations, the Phase Ont! blocked EFTs held at Citibank and JP Morgan are ~u~iec1 to attachment. While these blocked
a.'~sets

are susceptible tll attachment. the Greenbaum ami Acosta

motion for turnover .must comply with N.V. CPLR § 5225(b), as required hy fed. R. Civ. P. 69.
lfthe evidence presented is suilicient to demonstrate that the entities whose assets ha.ve been blocked are ag.encies and instrt1mcntalities of Iran, and aze entitled to the l)ossession of these funds, but fur the blocked nature of tile accounl:s, these assets may be used to .satisfy judgments.

Se_q Weiningel' v. Castro, 462 f.Supp.2d 457,499 (S.D.N. Y. 2006).
33

,8111

The b;m.ks and the Iranian entities served with process have provided no evidence to

indicate that any of the Iranian entities o\ming or with interests in the asst:ts held at Citibank and JP Morgan are not agencies or lmmumentalities of the Iranian governmem. and this issue d~)e:;
not ilppear to be in dispute. It is the movant's burden on summary judgment, nevt:rLhelt!~sy to demonstrate that there is no issue of material fael as to the availability of these assets for

turnover. Ro:iriguez v. City of New York. 72 F.3d 1060~61 (2d Cir, 1995). Therefore, the evidence offered to support relationshIp between Iran and the entities whose aS5ets are SQught is
summari~cd

briefly belo ..." .

The Greenbaums and .'\ccostas largely rely on the facts as stated by the Levin PlalfHiffs regarding the Iranian interest in these assets. (Greenbaum/Acosta 56.1 Statement at ~ 10.) Tlle Levins, in tUr:l. rely heavily
011

an affidavit presented by Dr. Patrick Clawson. a Deputy Director
rn~litute

for Rt!starch llfthe Washington

for Near East Policy. See Affidavit of Dr. Patrick

Clawson, February 24, 2010, Levin v. BankofNew York et.al, 09 elv. 5900, ECF #- 233

C·Clawon Aff."). Dr. Clawson bas extensive cxp~lience \'esearching and consulting v,lith
government official~ about trrul, and has pubH:;hed several books on the
~uhject.

The fitst asset, held at JP Morgan, is a blocked EFT ::lent for the benefit of_

_

ill lh~' amount

(Smith Decl., Ex. 12. 10.) According to Dr. Clawson,

is wholly o\.vned by the ls;}amic Republic of Iran, and is controlled by Iran. (Clawson Aff at'l 27.) In support of this contention, Dr. incl udillg the _
CIaw~on

cites several online soun;c:;,
owned

website, which indicates that

34

by the T~lamic Republic o!'Intn, is the sole owner cf_ _ (Ide, Se~ also

The s~cond asset is a blocked EFT held at Citibank, sent for the benefit of t h c _
in the amount Dr. CI~wson '3tatcs that it is common knowledge that

0_,

the Nationallnminn Oil Company I::; wholly owned by the Islamic Republic ofIran, and that the

_ _ was established by the Natiol1ill Oil Company ofIran. (Clawson 1\1I., fl
27.) Dr. Cla\,\I'Son also statr.::s that the is controlled by Iran. (lIL) It has

not been disputed that the _ _ is an agency or instrumentality nf Iran.

B.

The Citibank Accounls

Three of the as::;ets currently held by Citibank are funds from inacrive conespondent
accounts associated with certain IraniruJ banks. (Smith DeGL, Ex. 11 p. 5.) These i.l..<;sets include
_ at an account associated with _ ill accounl assotiated with

a n d _ in an account associated

As discussed

earlier, TRIA and the FSIA render any blocked asset linked to a telTorist party sUbject to
execution or Ettacium::nl in order to satisfy judgmems held by terrQrisL victims.
Under CPLR § 5225. Plaintiffs atC entitled to a turnover order of the assets held in
the.:;c

accounts if Citibank is a '·person. in possession or cLlstody of money" in which agencies Or
inslrwnenlaliLies oflran have an interest. Weininger v. Castro, 462 F.Supp.2d 457,499

(S.DN.Y.20(6). If thu evidence presented is suflicient to demonstrdlc lhat three entities linked
to this account are agencies and instrumentalities ofIran, and

are entitled to the pos::;eiision of

7 Th~ iranian uw 1cr~hip of Sheer. Treasury Announces

is further confirmed by a pn:5~ rch:a~c rrom ,he U.S. Stale Depnnment. Fact on Irll!1'S N1.1Clear and .Mis.. . ile Programs, U.S. Tri.!<l.5ury Department (June 17, 2:) 10), available at htTp;!(\vww.stu(l.qwvilli:<nJl43265.btm.
T::!rgcl~

35

these fundl:i, but for the hlocked
judgments. ld. at 499.

natur~

of the aCCO\U1ts, thCSiC assets may be tL'>ed to satisfy

Citibank, in its briefjoiutly submitted with JP Morgan, explains tbat Defendant bank;:; make no independent aSSt,::::;;;ment of the terrorist status of an aCColUlt holder or wire transfer parly that is subject to blocking; pursuant to lhese regulations. Rather, they simply block (1) any i:l.cc;Qunt in their possession where the designated name appears, and (2) any wire transfer when the designated name appear in the string of parties to the wire transfer." There is no dispute that these three Cilibank aCCQunts are, Indeed, blocked account.;;;
subject to TRIA, Therefore, these asset.:; are subject to attachment under TRIA, and can btl
!'[t]h~:

turned ovt:r so long as Piaintiffs have satisfied the procedural requirements of CPLR § 5225 and

demollSlra\'t:d that Iran, the judgment debtor, or agencies and instrumentalities of Iran, have an
inlc:r~st

in these assets.
The first account 1S held in tbe name 01'_ _. Dr. Clawson states that"

_

is "wholl y owned by the Islamic Republic of Iran," and a national bank of Iran.

(Clawson Aff. at ~ 21.) In support of this assertion, Dr. Clawson cites a TrcasuTY Department

_

Press Re1easc _ _

among other sources, (Clawson

-
castl.

Aff- at ~ 21.) Dr. Clawson also includes a link to the Central Bank of hall website, which Ilsts

as government-owned bank.

Moreover.

_

ccnceded that it is an agency or instrumentalilY of Iran in the _

The seoond account i5 held in the name o f _ . According to Or. Claw;;on _
_ is a wholly owned suhsidiary ofthl:: Islamic Repuhlic of Iran. (Clawson Aft: at ~

22.) "State-O\\ned central banks indisputably are includcu in the § J603(b) definition of "agency

36

·.ilii:&KB._ _ _ _ _ _ _ _ _ _

1"""'"-----------

or instrumentality." Weinjn~, 462 F.Supp. 2d at 498. In !Support of this finding, Dr. Clawson

cites the OFAC·SD1\ List, as well as a Treasury Depart.mellt Press Release

at hltps:!lusLrca$.gov/press/releasesihp219.htm). (Clawson Aff. at" 22.)

·

available

The tl:ird account is held in the name

01'_

Dr. Clawson states that it is

common knowledge and is his expert opinion 1 . h a t _ is whoHy owned by the Islamic Republic ofTrsn. (Clav.'Son Aft. at ~r 23.) In support of this statement, Dr. Clawson cites the
OFAC·SDN list as well as several Iranian .:murce~. _ has been spcciIi-.:ally ucsignalt:d
ofWeapon~

in Executive Order 13&82 in October 2007 as a supporter ofthe proliferation

of

Mass De::slrucliUll 011 behalf of the govel1unent of Iran. Tn light of this Coures finding that TRIA subjects all of these Blocked Assets to attachment, and that the record demonstrates that the judgment creditor, Ira.1J, or its agencies or
instrumentalities have an interest in these asseB, the deposit accounts held in the names
at Citibank are
~>Llhject

of"

to <l.ttachlnent.

It has been demonstrated thal there is no triable iS$ue of fact as 10 the Gr~enbaum and

Acosta Judgment Creditors" entitlement to turnover ofthc Phase One Assets held al Citibank and

IP Morgan, they are awarded such judgment as a matter of law. Citibank and JP Morgan are
ordered to turnover the above identified assets

to the Greenbaum and Acosla creditors in partial
satisfaction of !.heir j lIdgment, and are hereby released from claims as to those assets asserted by other parties.

37

\t:'~IiII_ _ _ _ _ _ _ _ _· ·" - - - - - - - - - - - - - - - -

CONCLUSION Due to their failure to obtain a court order under 28 U.S.c. § 161O(c) prior to serving the writs of execution on the New York Banks, the Levins writs are invalid. In addition, the Heisers' writ is not capable of attaching the Bank of New York assets located in New York state because it was issued by a Maryland court and served on the Bank of New York in Maryland. The Greenbaum and Acosta Judgment Creditors have established that there is no issue of material fact that they hold a priority interest in those Phase One Assets which they have attached at Citibank and JP Morgan, and those assets are subject to attachment. The Greenbaum and Acosta Judgment Creditors are entitled as a matter of law to a grant of partial summary judgment as to those assets. PARTIAL FINAL JUDGMENT The Court having determined that there are good grounds for entering a partial judgment immediately, this Opinion and Order constitutes a partial final jUdgment, within the meaning of Rule S4(b) of the Federal Rules of Civil Procedure, and there is no just reason for delay in the entry ofjudgment as provided herein. This Opinion and Order presents a controlling question of lay,' which has not previously been decided, namely, the question of whether the requirements of 28 U.S.c. § 1610(c) are applicable to this proceeding. Entry of such partial final judgment will permit the Levin Plaintiffs, who are in their 80s and (in the case of Jeremy Levin) in ill health, to take an immediate appeal. Immediate appeal of this partial judgment will assist in the prompt adjudication of claims brought by the Levin Plaintiffs, the Greenbaum and Acosta Judgment Creditors, the Heiser Judgment Creditors, among others, to additional blocked assets during Phase Two of the case. An immediate appeal might also provide guidance with regard to the

38

adjudication of other turnover cases, which may involve similar issues, pending before other judges in this District but which have not progressed as far as this action. Notwithstanding the foregoing, this partial judgment shall constitute a final judgment only with respect to the validity of the Levins' claims to the Phase One Assets (identified in Exhibit 12 to the Smith Declaration, which is filed under seal), the validity of the Greenbaum and Acosta Judgment Creditors' claims to the Citibank Phase One Assets and the JP Morgan Phase One Asset, and with respect to the claims of any party to or the rights of any party in the Citibank Phase One Assets or the JP Morgan Phase One Asset. This judgment, compliance with its terms, and all proceedings to enforce it, shall be stayed pending appeal by the Levin Plaintiffs from the judgment being entered hereby to the United States Court of Appeals for the Second Circuit, on the condition that a notice of appeal is filed in a timely fashion. In view of the Levins' intent to appeal solely on this issue of law, any actions by any parties to this litigation with regard to the Phase One Assets are also stayed pending appeal by the Levin Plaintiffs.

IT IS SO ORDERED. Dated: New York, New York March

:t, 2011
Robert P. Patterson, Jr. U.S.D.l.

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Copies of this opinion were sent to:
Suzelle Smith Howarth & Smith 523 West Sixth Street, Suite 728 Los Angeles, CA 90017 Fax: [phone] (via fax and ECF) Howard B. Levi 1. Kelley Nevling, Jr. Levi Lubarsky & Feigenbaum LLP 1185 Avenue of the Americas, 17th Floor New York, NY 10036 Fax: [phone] Robert Joseph Tolchin, Esq. 225 Broadway, 24th Floor New York, NY 10007 Fax: [phone] (via fax and ECF)

Annie Pennock Kaplan Fay Kaplan Law, P.A. 700 Fifth Street NW Wasshington, DC 20001 Fax: [phone] (via fax and ECF)

Sharon L. Schneier Davis Wright Tremaine LLP 1633 Broadway New York, NY 10019 Fax: [phone] (via fax and ECF)

Liviu Vogel Petek Gunay Salon Marrow Dyckman Newman Broudy LLP 292 Madison Ave, 6th floor New York, NY 10017 Fax: [phone] (via fax and ECF) Cary Brian Samowitz DLA Piper US LLP (NY) 1251 Avenue of the Americas New York, NY 10020 Fax: [phone] (via fax and ECF)

Mark G. Hanchet Christopher J. Houpt Mayer Brown LLP 1675 Broadway New York, NY 10019 Fax: [phone] (via fax and ECF)
I

Curtis Campbell Mechling Jeremy Sage Rosof Stroock & Stroock & Lavan LLP 180 Maiden Lane New York, NY 10038 Fax: [phone] (via fax and ECF)

Dale K. Cathell David B. Mis1er Richard M. Kremen DLA Piper US LLP (MD) 6225 Smith A venue Baltimore, MD 21209 Fax: [phone] (via fax and ECF) George Michael Chalos Kerri Marie D'Ambrosio Chalos & Co., P.c. 123 South Street Oyster Bay, NY 11771 Fax: [phone] (via fax and ECF) All additional counsel of record (via ECF)

Jeffrey Lance Nagel Terry Alan Myers Gibbons P.c. (NY) One Pennsylvania Plaza, 37th Floor New York, NY 10119 Fax: [phone] (via fax and ECF) Noel J. Nudelman Fax: [phone] (via fax and ECF)

I

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