Doe v. Ejercito de Liberacion Nacional et al

Filing 201

MEMORANDUM OPINION AND ORDER: For the foregoing reasons, Doe's motion for a turnover order is denied. This Memorandum Opinion and Order resolves docket entry no. 176. A pre-trial conference in this matter will be held on April 6, 2017, at 10:30 a.m. The parties are directed to file an updated joint pre-trial statement one week prior to the conference identifying, inter alia, the matters remaining to be resolved in this litigation, any necessary discovery, and any anticipated motion practice , and provide a courtesy copy of that filing for Chambers.SO ORDERED. re: 176 MOTION for Turnover Order filed by John Doe., ( Pretrial Conference set for 4/6/2017 at 10:30 AM before Judge Laura Taylor Swain.) (Signed by Judge Laura Taylor Swain on 2/14/2017) (ama)

UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK
-------------------------------------------------------x
JOHN DOE,
Petitioner,
-v-

No. 15 CV 8652-LTS

EJERCITO DE LIBERACION NACIONAL,
et al.,
Defendants,
-andJP MORGAN CHASE BANK, N.A., et al.
Respondents.
------------------------------------------------------JP MORGAN CHASE BANK, N.A.,
Third-Party Petitioner,
-vGRAND STORES LTD., TRUST BANK LTD.,
TAJCO a/k/a TAJCO LTD., and ARAB
GAMBIAN ISLAMIC BANK LTD., et al.,
Third-Party Respondents.
-------------------------------------------------------x
MEMORANDUM OPINION AND ORDER
Before the Court is the motion of Petitioner John Doe for an order requiring the
turnover of two blocked bank accounts (the “Blocked Accounts”) currently held by Respondent
JP Morgan Chase Bank, N.A. (“JP Morgan”). (Docket entry no. 176.) The Court has
jurisdiction of this proceeding pursuant to 28 U.S.C. § 1331. JP Morgan opposes the motion on

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the grounds that the turnover Plaintiff seeks is precluded by the Second Circuit’s holdings in
Calderon-Cardona v. Bank of N.Y. Mellon, 770 F.3d 993 (2014), and Hausler v. JP Morgan
Chase Bank, N.A., 770 F.3d 207 (2014). The Court has carefully considered all of the
submissions in connection with this motion practice, and, for the reasons that follow, denies
Petitioner’s motion for a turnover order.

BACKGROUND
This action was initiated in June 2015 with the registration in this District by
Petitioner Doe of a $36.8 million judgment rendered against Defendants Ejercito de Liberacion
Nacional (the “ELN”) and Fuerzas Armadas Revolucionarios de Colombia (the “FARC” and,
with ELN, “Defendants”) by the United States District Court for the Southern District of Florida.
JP Morgan was named as a respondent in Petitioner John Doe’s August 31, 2015, petition in this
Court for a turnover order. (Docket entry no. 4.) In Doe’s petition, he seeks the turnover of
assets allegedly belonging to purported agents or instrumentalities of the FARC. (Docket entry
no. 4, ¶ 14.) Specifically, as relevant to the instant motion, Doe seeks the turnover of assets he
alleges are the property of Grand Stores Ltd. (“Grand Stores”), and Tajco or Tajco Ltd.
(“Tajco”), both of which Doe claims are agents or instrumentalities of the FARC, for purposes of
executing upon his Florida judgment.1 (Id.)
The Blocked Accounts that are the subject of the instant motion for a turnover
order are alleged, in the operative Third Amended Complaint in the related interpleader

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The Terrorism Risk Insurance Act of 2002, Pub.L. No. 107–297, § 201(a), 116 Stat.
2322, 2337 (“TRIA”), permits execution of certain judgments upon assets of a state
actor or terrorist party as well as any “agency or instrumentality” of such a party.
Id.

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proceeding commenced by JP Morgan (docket entry no. 159 (the “TAC”)), as supplemented by
the factual proffer of JP Morgan’s counsel (docket entry no. 186 (Declaration of Steven B.
Feigenbaum (“Feigenbaum Decl.”)), to have come into existence as follows:
(1) The Grand Stores blocked account, which was originated by Grand Stores,
contains funds that were sent by an electronic fund transfer (“EFT”) that originated with Trust
Bank Ltd. (“Trust Bank”), as the originator’s bank. Trust Bank sent the funds to Credit Suisse
AG (“Credit Suisse”), as Trust Bank’s correspondent bank, and then Credit Suisse sent the funds
to JP Morgan, as the beneficiary bank.2 (Feigenbaum Decl. ¶ 5.) JP Morgan blocked the transfer
and placed the funds into a blocked account because Grand Stores was listed on the Office of
Foreign Asset Control (“OFAC”) list of Specially Designated Global Terrorists (“SGDT”) at the
time of the wire transfer.3 (TAC ¶ 63.)
(2) The Tajco blocked account, which does not have an identified originator,
contains funds that were sent by an EFT that originated with Arab Gambian Islamic Bank Ltd.
(“Arab Gambian”), with a notation “B/O Tajco”, as the originator’s bank. Arab Gambian sent
the funds to AHLI United Bank UK PLC (“AHLI”), as Arab Gambian’s correspondent bank, and
then AHLI sent the funds to JP Morgan, as the intermediary bank, with instructions for JP
Morgan to send the funds to Lebanese Canadian Bank SAL (“Lebanese Canadian Bank”), as the
beneficiary’s bank. (Feigenbaum Decl. ¶ 7; TAC ¶ 65.) JP Morgan blocked the transfer and

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The TAC alleges that JP Morgan was the intermediary bank, and received the ETF
with instructions to send the funds to ED & F Man Treasury Management PLC
(“ED&F”), as the beneficiary bank. (TAC ¶ 63.) Whether JP Morgan was the
beneficiary bank or the intermediary bank does not affect the legal analysis that
follows.

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31 C.F.R. Section 594.310 defines an SGDT as a person whose property must be
blocked by U.S. financial institutions pursuant to 31 C.F.R. Section 594.201. It is
undisputed by the parties that Grand Stores and Tajco are SGDTs.

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placed the funds into a blocked account because Tajco was referenced in the payment details of
the EFT and was listed on the OFAC list of SGDTs at the time of the wire transfer. (Id.) Doe
does not dispute these allegations.
In connection with these proceedings, both Credit Suisse and AHLI have
disclaimed any ownership or property interest in the Blocked Accounts for which they served as
correspondent banks. (Docket entry nos. 51 & 61.)
Doe further alleges that both Grand Stores and Tajco are agencies or
instrumentalities of the FARC, and that turnover of their assets to satisfy Doe’s judgment against
the FARC is authorized under the Terrorism Risk Insurance Act (“TRIA”), 28 U.S.C. § 1610(a),
which is commonly referred to as Section 201(a) of TRIA. See Pub. L. No. 107-297, 116 Stat.
2322 (2002).

DISCUSSION
TRIA permits a plaintiff 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, where: (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. Weininger v. Castro, 462 F. Supp. 2d 457, 479 (S.D.N.Y. 2006). The only material
disputed issue raised in the instant motion practice is whether the assets in the Blocked Accounts
are the property of Grand Stores or Tajco. Because the Court concludes that they are not, the
Court does not address whether Doe could satisfy the other requirements of TRIA.
In Hausler, the Second Circuit considered a similar case, in which a plaintiff
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sought to attach assets sent via EFT to satisfy a judgment under TRIA Section 201(a). 770 F.3d
at 211. The Second Circuit, relying on Calderon-Cardona (which analyzed attempted attachment
under the Foreign Sovereign Immunities Act, rather than TRIA), held that “‘EFTs are neither the
property of the originator nor the beneficiary while briefly in the possession of an intermediary
bank.’” Id. at 212 (quoting Calderon-Cardona, 770 F.3d at 1001). Rather, “‘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.’” Id. (quoting Calderon-Cardona, 770 F.3d at 1002) (emphasis added).
Here, as in Hausler, “it is undisputed that no [SDGT] transmitted any of the
blocked EFTs in this case directly to the blocking bank.” Id. Credit Suisse transmitted the funds
held in the Grand Stores blocked account to JP Morgan; AHLI transmitted the funds held in the
Tajco blocked account to JP Morgan. Hausler therefore compels the conclusion that neither
Grand Stores nor Tajco “ha[s] any property interest in the ETFs that are blocked at” JP Morgan,
and those funds are accordingly “not attachable under TRIA § 201.” Id.
Doe seeks to avoid the application of Hausler to this case by arguing that the
property interests of Credit Suisse and AHLI have either expired or been disclaimed and that,
under general equitable principles, Grand Stores and Tajco ought to be recognized as the only
parties with interests in the Blocked Accounts, on which Doe should therefore be permitted to
execute. (See docket entry no. 195, Corrected Reply in Support of Petitioner’s Motion for
Turnover, at 12.) Doe’s desired result is, however, precluded by the Second Circuit’s binding
legal determinations in Calderon-Cardona and Hausler that only property of a target party can be
attached under TRIA and that a mid-stream EFT is the sole property of the entity that transmitted
the EFT to the blocking bank. See Calderon-Cardona, 770 F.3d at 1000-01; Hausler, 770 F.3d at
212. Thus, because “it is undisputed that [neither Grand Stores nor Tajco] transmitted any of the
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blocked EFTs in this case directly to the blocking bank . . . neither [Grand Stores nor Tajco has]
any property interest in the EFTs that are blocked at the . . . banks.” Hausler, 770 F.3d at 212
(emphasis added). The intermediary banks’ disclaimers thus could not vest a property interest in
the originator, nor does the potential for equitable claims constitute a current property interest in
the blocked assets.
Because Doe has not demonstrated that the Blocked Accounts contain property of
Grand Stores or Tajco that is attachable under TRIA, the turnover motion must be denied and the
Court need not address Doe’s arguments regarding equitable claims to the funds.

CONCLUSION
For the foregoing reasons, Doe’s motion for a turnover order is denied. This
Memorandum Opinion and Order resolves docket entry no. 176.
A pre-trial conference in this matter will be held on April 6, 2017, at 10:30 a.m.
The parties are directed to file an updated joint pre-trial statement one week prior to the
conference identifying, inter alia, the matters remaining to be resolved in this litigation, any
necessary discovery, and any anticipated motion practice, and provide a courtesy copy of that
filing for Chambers.
SO ORDERED.
Dated: New York, New York
February 14, 2017
/s/ Laura Taylor Swain
LAURA TAYLOR SWAIN
United States District Judge

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