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FLATOW v. ISLAMIC REPUBLIC OF IRAN

December 10, 1999

STEPHEN M. FLATOW, PLAINTIFF
v.
ISLAMIC REPUBLIC OF IRAN, THE IRANIAN MINISTRY OF INFORMATION & SECURITY, AYATOLLAH ALI HOSEINIE KHAMENEI, ALI AKBAR HASHEMI-RAFSANJANI, ALI FALLAHIAN-KHUZESTANI, AND JOHN DOES 1-99, DEFENDANTS.



The opinion of the court was delivered by: Lamberth, District Judge.

  MEMORANDUM OPINION

This matter concerns yet another attempt by Plaintiff Stephen Flatow to satisfy the judgment he obtained almost two years ago against the Islamic Republic of Iran ("Iran") for its sponsorship of the terrorist group that murdered his daughter. Pursuant to the Foreign Sovereign Immunities Act, he has levied writs of attachment upon three parcels of real estate owned by the Islamic Republic of Iran, including the former Iranian embassy, and two NationsBank accounts containing funds generated by the State Department's lease of these properties. 28 U.S.C.A. § 1610(a)(7) & 1610(f)(1)(A) (West Supp. 1999). Once again, however, the United States has intervened to quash the writs of attachment,*fn1 contending that the properties and accounts are immune from attachment under the Foreign Missions Act, 22 U.S.C. § 4301-4316 (1999), the Foreign Sovereign Immunities Act, 28 U.S.C.A. §§ 1609 & 1610 (West Supp. 1999), the International Emergency Economic Powers Act, 50 U.S.C. § 1701-1702 (1999), the Vienna Convention on Diplomatic Relations,*fn2 and Article II of the Constitution. U.S. CONST. ART. II, § 3, cl. 3 (granting the President the power "to receive Ambassadors and other public Ministers). Because the Court finds that these properties and accounts are immune from attachment under the Foreign Sovereign Immunities Act, the Court hereby GRANTS the United States' motion and the July 9, 1998 writs of attachment are hereby QUASHED. Thus, having found that plaintiff is barred from attaching the properties and accounts under the Foreign Sovereign Immunities Act, the Court need not determine whether their attachment under this Act would run afoul of the Constitution, the Foreign Missions Act, the International Emergency Economic Powers Act, or the Vienna Convention.

I. BACKGROUND

In April 1995, the Shaqaqi faction of the Palestine Islamic Jihad, a group that is funded exclusively by the Islamic Republic of Iran ("Iran"), bombed a tourist bus in Gaza, killing Stephen Flatow's 20-year-old daughter Alisa. See Flatow v. The Islamic Republic of Iran, 999 F. Supp. 1, 6-9 (D.D.C. 1998). One year later, utilizing a newly-enacted amendment to the Foreign Sovereign Immunities Act, Flatow filed a wrongful death action against Iran, its Ministry of Information & Security and various high-level government officials. See Civil Liability for Acts of State Sponsored Terrorism, Pub.L. No. 104-208, Div. A., Title I § 101(c) [Title V, § 589, 110 Stat. 3009-172], (30 September 1996) reprinted at 28 U.S.C.A. § 1605(a)(7) (West Supp. 1999) (creating jurisdiction over claims against foreign entities who provide material support for acts of extrajudicial killing, inter alia) (commonly called the "Flatow Amendment"); see also Flatow, 999 F. Supp. at 5. Iran failed to appear. Accordingly, this Court held an evidentiary hearing and determined that the plaintiff had "establishe[d] his claim or right to relief by evidence . . . satisfactory to the Court." 28 U.S.C.A. § 1608(e) (West Supp. 1999); Flatow, 999 F. Supp. at 5. Based upon the evidence presented at this hearing, the Court entered a default judgment against Iran, finding Iran and the co-defendants jointly and severally liable for compensatory damages, loss of accretions, solatium and $225,000,000.00 in punitive damages. Flatow, 999 F. Supp. at 5. To date, Flatow's efforts to satisfy his judgment against Iran have proven unsuccessful. See, e.g., Flatow v. Islamic Republic of Iran, 74 F. Supp.2d 18, 20 (D.D.C. 1999) (quashing writ of attachment against U.S. Treasury funds); Flatow v. Islamic Republic of Iran, 67 F. Supp.2d 535, 537-38 (D.Md. 1999) (quashing writs of execution against nonprofit foundation's property). In the instant matter, Flatow seeks to attach various parcels of real estate in Washington, D.C., belonging to Iran. Notably, these properties include the former Iranian embassy.*fn3 Flatow also seeks attachment of two NationsBank bank accounts, which are entitled "Blocked Iranian Diplomatic and Consular Property Renovation Account do Blocked Assets Administration, U.S. Department of Treasury" ("First Account") and "U.S. Department of State, Office of Foreign Missions, Iranian Renovation Account" ("Second Account"). The First Account comprises excess funds and interest generated from the leasing of these properties to third parties. The Second Account, which originally contained Iranian diplomatic and consular accounts, contains funds generated by the leases but used for maintenance and related expenses.

Despite its public proclamations of support for efforts*fn4 to bring state sponsors of terrorism to justice, the Clinton administration has intervened to forestall plaintiff Flatow's ability to satisfy his judgment. See Determination to Waive Requirements Relating to Blocked Property of Terrorist-List States, 63 Fed.Reg. 59201 (October 21, 1998) (exercising authority to waive requirements under § 117(d) and stating that such requirements "would impede the ability of the President to conduct foreign policy in the interest of national security"); see also Flatow, 74 F. Supp.2d at 20 (D.D.C. 1999). In this latest chapter in plaintiff's ongoing struggle to hold accountable those responsible for his daughter's murder, the United States contends, inter alia, that the Foreign Sovereign Immunities Act, the Foreign Missions Act, the International Emergency Economic Powers Act, the Vienna Convention on Diplomatic Relations and Article III of the Constitution bar the attachment of these properties and accounts. As explained below, because the Court finds that it lacks jurisdiction over the properties and accounts under the Foreign Sovereign Immunities Act, the Court need not reach the merits of the United States' other claims.*fn5

II. DISCUSSION

A. The Foreign Sovereign Immunities Act

The enumerated exceptions to the Foreign Sovereign Immunities Act ("FSIA") provide the exclusive source of subject matter jurisdiction over all civil actions against foreign states. Argentine Republic v. Amerada Hess Shipping Corp., 488 U.S. 428, 434-35, 109 S.Ct. 683, 102 L.Ed.2d 818 (1989). Accordingly, the FSIA must be applied in every action involving a foreign state defendant. Verlinden B. V. v. Central Bank of Nigeria, 461 U.S. 480, 489, 103 S.Ct. 1962, 76 L.Ed.2d 81 (1983). Unless one of the FSIA's exceptions applies, foreign states enjoy immunity from the jurisdiction of U.S. courts. 28 U.S.C.A. § 1604 (West 1999). Similarly, the property of a foreign state in the United States is immune from attachment or execution, unless an exception under sections 1610 or 1611 provides otherwise. 28 U.S.C.A. §§ 1610 & 1611 (West Supp. 1999). Section 1610 enumerates the general exceptions to immunity from attachment or execution, while Section 1611 specifies particular types of property that are immune from execution.

B. Attachment under 1610(a)(7)

Plaintiff contends that Section 1610(a)(7) of the FSIA authorizes the attachments here because the properties and accounts are "used for commercial activity" within the meaning of the FSIA and the judgment he seeks to enforce was awarded under Section 1605(a)(7), the state-sponsored terrorism exception. The United States does not contest the source of the judgment. Rather, the United States asserts that the property and accounts at issue do not meet the threshold requirement of the exception, i.e., that the property is "used for commercial activity in the United States." 28 U.S.C.A. § 1610(a)(7). Plaintiff maintains that the critical inquiry regarding commercial use is the nature of the activity, not its purpose and that the identity of the commercial actor is immaterial to the inquiry. Thus, he characterizes these properties and accounts as commercial in nature because the United States' leasing of the properties is not an inherently sovereign action, but one that may be undertaken by a private actor. Republic of Argentina v. Weltover, Inc., 504 U.S. 607, 614, 112 S.Ct. 2160, 119 L.Ed.2d 394 (1992) (concluding that, for purposes of the FSIA's "commercial activity" exception, "when a foreign government acts, not as regulator of a market but in the manner of a private player within it," the activities are commercial).

While agreeing that the nature of the activity governs "commercial activity" analysis, see 28 U.S.C.A. § 1603(d); see also Weltover, 504 U.S. at 614, 112 S.Ct. 2160, the United States asserts that, for purposes of the FSIA, only the foreign state's actions are relevant, not those of the United States. The United States points out that Iran opposes the leases of its properties. See Islamic Republic of Iran v. United States, Case Nos. A4/A7/A5 (I:F and III); Dec. 129-A4/A7/A15-FT, at 1-2 (June 23, 1997, Iran-United States Claims Tribunal) (denying Iran's request to have leases terminated and noting that Section leases were "in order to prevent [the properties] falling into an irreversible state of disrepair"). In the alternative, the government argues that, even if a foreign state's actions are not critical to the applicability of this provision, the actions undertaken by the United States in this matter are sovereign, not commercial, in nature. That is, the government contends that the United States, through the State Department's Office of Foreign Missions, is acting in its sovereign capacity by taking custody of and leasing these properties pursuant to its "preserve and protect" responsibilities under the Foreign Missions Act, as well as discharging its duties under the Vienna Convention. See Foreign Missions Act, 22 U.S.C. § 4305 (c) (providing that "[i]f a foreign mission has ceased conducting diplomatic, consular and other governmental activities in the United States, and has not designated a protecting power or other agent . . . the Secretary, until the designation of a protecting power or other agent . . . may preserve and protect any property of that foreign mission"); see also Vienna Convention on Diplomatic Relations, Article 45(a), T.I.A.S. 7502, 23 U.S.T. 3227 (1964) (providing that "[i]f diplomatic relations are broken off between two states . . . (a) the receiving state must, even in the case of armed conflict, respect and protect the premises of the mission, together with its property and archives").

To address whether these properties and accounts are "used for commercial activity" for purposes of Section 1610(a)(7), the Court begins with the statutory language. Section 1610(a)(7) provides that

  [t]he property in the United States of a foreign state . . .
  used for a commercial activity in the United States, shall
  not be immune from attachment in aid of execution, or from
  execution upon a judgment entered by a court of the United
  States . . . if
    the judgment relates to a claim for which the foreign
    state is not immune under section 1605(a)(7), regardless
    of whether the property is or was involved

    ...

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