United States District Court, D. Columbia
October 25, 2005.
FRANCE MOKHATEB RAFII, Plaintiff,
THE ISLAMIC REPUBLIC OF IRAN, and THE IRAN MINISTRY OF INFORMATION AND SECURITY, Defendants.
The opinion of the court was delivered by: COLLEEN KOTELLY, District Judge
Currently before the Court are two issues: (1) the potential
vacatur of Plaintiff's December 2, 2002 judgment entered in this
case, in light of principles announced in the District of
Columbia Court of Appeal's decision in Cicippi-Puleo v. Islamic
Republic of Iran, 353 F.3d 1024, 1033 (D.C. Cir. 2004); and (2)
the potential quashing of Plaintiff's remaining writs of
attachment against certain properties that allegedly fall under
the category of "blocked assets" for the purposes of the
Terrorism Risk Insurance Act ("TRIA"), Pub.L. No. 107-297,
116 Stat. 2322 (Nov. 26, 2002). Upon a searching examination of these
issues and the extensive briefing before it, the Court concludes
that (1) it shall not exercise its limited discretion under
Federal Rule of Procedure 60(b) to vacate the final judgment
entered in favor of Plaintiff, despite the fact that subsequent
decisions by the D.C. Circuit and courts within the United States
District Court for the District of Columbia have undermined the
legal reasoning employed by this Court in rendering its final judgment in favor of Plaintiff; and (2) it
shall grant in full the United States's motion to quash all of
Plaintiff's remaining writs of attachment.
On December 2, 2002, this Court entered a default judgment,
pursuant to 28 U.S.C. § 1605(a)(7), in favor of Plaintiff, France
Rafii, and against the Islamic Republic of Iran ("Iran") and the
Iranian Ministry of Information and Security ("MOIS") for the
damages she suffered resulting from the murder of her father by
agents of Defendants. The Court awarded Plaintiff $5 million in
compensatory damages against Iran and MOIS, jointly and
severally, and $300 million in punitive damages against MOIS.
See Rafii v. Islamic Republic of Iran, Civ. No. 01-850(CKK), at
28-29 (D.D.C. Dec. 2, 2002) (memorandum opinion and order
approving default judgment and awarding damages). In December
2002, and May 2003, Plaintiff served five writs of attachment
seeking to enforce her December 2, 2002 judgment entered by this
Court: (1) a December 30, 2002 writ served on the Department of
Treasury; (2) a December 30, 2002 writ served on Bank of America;
(3) a May 5, 2003 writ served on the Department of Defense; (4) a
May 5, 2003 writ served on the Department of State; and (5) a May
5, 2003 writ served on the Department of Treasury. The United
States subsequently moved to quash these writs in a series of
filings entered in early 2003.
On March 31, 2004, the Court entered a Memorandum Opinion and
Order expressing its belief that the United States's motion to
quash all of Plaintiff's writs of attachment should be probably
granted because the Court's December 2, 2002 judgment against
Iran and MOIS was contrary to the District of Columbia Circuit
Court of Appeals decision in Cicippio-Pueleo v. Islamic Republic
of Iran, 353 F.3d 1024 (D.C. Cir. 2004). However, in the
alternative, the Court conclusively found that sovereign immunity would bar attachment
of the First and Second Accounts with the Bank of America and
that the Third and Fourth Accounts with the bank were not within
the possession or control of the United States and, therefore,
not subject to attachment pursuant to Plaintiff's writ against
the United States Department of Treasury. See Rafii v. Islamic
Republic of Iran, Civ. No. 01-850, at 3 n. 2 (D.D.C. Mar. 31,
2004) (memorandum opinion). The Court, however, did not vacate
Plaintiff's judgment, and instead gave Plaintiff an opportunity
to submit briefing as to why her judgment should not be vacated.
Moreover, the reach of the Court's Order was further limited, as
it only specifically addressed one of the five writs issued by
Plaintiff. See Rafii v. Islamic Republic of Iran, Civ. No.
01-850 (D.D.C. Mar. 31, 2004) (order directing that "Plaintiff's
Writ of Attachment served on the United States Department of
Treasury is QUASHED").
As such, the Court's March 31, 2004 Order merely quashed (#1)
the December 30, 2002 writ served on the Treasury Department upon
a finding that the attachment was barred because of (1) the
United States's sovereign immunity and (2) the fact that certain
accounts were not in the possession or control of the United
States. See Rafii v. Islamic Republic of Iran, Civ. No. 01-850
(D.D.C. Mar. 31, 2004) (order quashing Dec. 30, 2002, Treasury
Department writ). The Court's decision did not rest upon a
finding that Cicippio-Puleo compelled the quashing; rather, the
Court merely raised the question vis-á-vis the remaining writs
and invited briefing on that matter. See id.
Upon Plaintiff's explicit concession of any claim of attachment
to the First and Second Accounts with the Bank of America, this
Court issued an Order on January 11, 2005 quashing (#2) the
December 30, 2002 writ of attachment served by Plaintiff on
garnishee Bank of America, N.A, with respect to the accounts denominated as the
"First Account" and "Second Account" in the filings made by the
parties and in the Answers to Interrogatories in Attachment filed
by the Bank of America. See Rafii v. Islamic Republic of Iran,
Civ. No. 01-850 (D.D.C. Jan. 11, 2005) (order partially quashing
writs with Bank of America). After some confusion regarding the
extent of the Court's January 11, 2005 Order, Plaintiff filed a
February 17, 2005 Notice with this Court stating that "she
consents to allowing the court to vacate without prejudice the
May 5, 2003 writ served upon the Department of State with respect
to the `First Account' and `Second Account' in the filings made
by the parties and in Answers to Interrogatories in Attachment
filed by the Bank of America." Pl.'s Notice at 1. Accordingly,
the Court also entered an Order partially quashing (#4) the May
5, 2003 writ of attachment served on the Department of State.
See Rafii v. Islamic Republic of Iran, Civ. No. 01-850 (D.D.C.
Feb. 22, 2005) (order partially quashing May 5, 2003 writ with
the Department of State).
By the Court's count, after taking into account this flurry of
orders and legal briefing, two issues currently remain before it
for resolution. First, the Court must resolve the question raised
by its March 31, 2004 Order: Should Plaintiff's December 2, 2002
judgment against Iran and the MOIS be vacated in light of
subsequent decisions undermining this Court's legal reasoning?
Second, the Court must resolve the issue of the remaining writs
of attachment not dealt with in its earlier Orders.
Given the two issues ripe for resolution, the Court shall first
turn to the potential vacatur of Plaintiff's December 2, 2002
judgment against Iran and the MOIS, and then shall deal with the
issue of the outstanding writs of attachment. A. The Possible Vacatur of the December 2, 2002 Judgment
1. Issues With the December 2, 2002 Final Judgment
With the clarity of retrospective hindsight, two major problems
exist with the legal reasoning contained within the Court's
decision to enter judgment in Plaintiff's favor on December 2,
2002. First, consistent with numerous FSIA-related decisions at
the time, see, e.g., Elahi v. Islamic Republic of Iran,
124 F. Supp. 2d 97, 114 (D.D.C. 2000); Sutherland v. Islamic Republic
of Iran, 151 F.Supp.2d 27, 53 (D.D.C. 2001); Wagner v.
Islamic Republic of Iran, 172 F. Supp. 2d 128, 138 (D.D.C.
2001), the Court awarded Plaintiff $300 million in punitive
damages against the MOIS. See Rafii v. Islamic Republic of
Iran, Civ. No. 01-850(CKK), at 232-9 (D.D.C. Dec. 2, 2002)
(concluding that the MOIS fell outside the punitive damages bar
against foreign states contained within 28 U.S.C. § 1606).
However, in Roeder v. Islamic Republic of Iran, 333 F.3d 228
(D.C. Cir. 2003), issued seven months later, the D.C. Circuit
concluded that a similar award of punitive damages was erroneous.
See id. at 234-35. The Roeder court set down a categorical
approach for determining if an entity should be considered the
foreign state itself for the purposes of the Section 1606: "if
the core functions of the entity are governmental, it is
considered the foreign state itself; if commercial, the entity is
an agency or instrumentality of the foreign state." Id. at 234.
Pursuant to this categorical test, the D.C. Circuit determined
that because the core functions of the MOIS Iran's Ministry of
Foreign Affairs are "governmental" in nature, the entity must
be considered the foreign state of Iran itself rather than its
agent. As such, pursuant to the plain language of Section 1606,
the MOIS could not be liable for punitive damages in a
FSIA-related action. See id. at 234-35. Second, consistent with virtually every FSIA-related decision
at that time, the Court assumed that Plaintiff could maintain a
cause-of-action against Defendants Iran and the MOIS pursuant to
the sovereign immunity exception provided under Section
1605(a)(7), see 28 U.S.C. § 1605(a)(7), and the Flatow
Amendment, see 28 U.S.C. § 1605 note. See Rafii v. Islamic
Republic of Iran, Civ. No. 01-850(CKK), at 15-17 (D.D.C. Dec. 2,
2002) (assuming a cause-of-action under Section 1605(a)(7) and
the Flatow Amendment). Subsequent to the Court's December 2, 2002
entry of judgment in favor of Plaintiff, the D.C. Circuit issued
two decisions that ultimately overturned such an assumption: (1)
in Cicippio-Puleo v. Islamic Republic of Iran, 353 F.3d 1024
(D.C. Cir. 2004), the D.C. Circuit specifically held that
"neither 28 U.S.C. § 1605(a)(7) nor the Flatow Amendment, nor the
two considered in tandem, creates a private right of action
against a foreign government," id. at 1033; and (2) in Acree
v. Republic of Iraq, 370 F.3d 41 (D.C. Cir. 2004), the D.C.
Circuit further held that plaintiffs cannot state a right of
action under the "generic common law" or merely "allude to the
traditional torts . . . in their generic form" but instead must
"identify a particular cause of action arising out of a specific
source of law," id. at 58-59 (quotation omitted). Subsequent
decisions by judges within the United States District Court for
the District of Columbia reveal that in FSIA-related cases
similar to the one brought by Plaintiff in this case, state
common and statutory law alone provide the causes-of-actions for
claims by plaintiffs brought pursuant to the jurisdiction
provided by Sections 1605(a)(7) and 1606. See, e.g., Holland v.
Islamic Republic of Iran, Civ. No. 01-1924 (D.D.C. October __,
2005) (Kotelly, J.); Dammarell v. Islamic Republic of Iran,
Civ. No. 01-2224 (JDB), 2005 WL 756090 (D.D.C. Mar. 29, 2005)
(Bates, J.) ("Dammarell II"); Salazar v. Islamic Republic of
Iran, 370 F. Supp. 2d 105 (D.D.C. 2005) (Bates, J.); Price v.
Socialist People's Libyan Arab Jamahiriya, 384 F. Supp. 2d 120 (D.D.C. July 26,
2005) (Lamberth, J.); Wyatt v. Syrian Arab Republic, Civ. No.
01-1628(RMU), ___ F. Supp. 2d ___, 2005 WL 240152 (D.D.C. Sept.
30, 2005) (Urbina, J.).
2. The Court's Power to Vacate a Final Judgment
Given that this Court's Findings of Fact and Conclusions of Law
entered on December 2, 2002 are premised upon legal reasoning now
considered to be faulty, the question becomes: Does the Court
have the power, as implied in this Court's March 31, 2004 Order,
to vacate Plaintiff's default judgment obtained against Iran and
the MOIS? A review of the Federal Rules of Civil Procedure and
the relevant case law indicates that the judgment entered in
favor of Plaintiff must stand.
"Default judgments are generally disfavored by courts, because
entering and enforcing judgments as a penalty for delays in
filing is often contrary to the fair administration of justice."
Int'l Painters & Allied Trades Union & Indus. Pension Fund v.
H.W. Ellis Painting Co., 288 F. Supp. 2d 22, 25 (D.D.C. 2003)
(citing Jackson v. Beech, 636 F.2d 831, 835 (D.C. Cir. 1980)).
However, the decision whether to set aside a default judgment is
nonetheless committed to the sound discretion of the trial court.
See Keegel v. Key West & Carribean Trading Co., 627 F.2d 372,
373 (D.C. Cir. 1980); In re Chalasani, 92 F.3d 1300, 1307 (2d
Cir. 1996). Federal Rule of Civil Procedure 55(c) provides: "For
good cause shown the court may set aside an entry of default and,
if judgment by default has been entered, may likewise set it
aside in accordance with Rule 60(b)." Fed.R.Civ.P. 55(c).
Therefore, while the court may set aside an entry of default with
relative ease, as the standard for doing so is "a liberal one,"
see United States v. $23,000 in United States Currency,
356 F.3d 157, 164 (1st Cir. 2004) (citing Coon v. Grenier,
867 F.2d 73, 76 (1st Cir. 1989)), a court may only set aside a default
judgment "in accordance with Rule 60(b)," id. Because there was
an actual default judgment entered in this case, the parameters
set out in Rule 60(b) are determinative in the Court's inquiry.
Rule 60(b) provides that "[o]n motion and upon such terms as
are just, the court may relieve a part or a party's legal
representative from a final judgment, order, or proceeding" for
several enumerated reasons. Fed.R.Civ.P. 60(b). To determine
if a decision constitutes a final judgment, courts must ascertain
whether it amounts to "a judgment in the sense that it is a
decision upon a cognizable claim for relief, and whether it is
`final' in the sense that it is `an ultimate disposition of an
individual claim entered in the course of a multiple claims
action.'" Curtiss-Wright Corp. v. Gen. Elec. Co., 446 U.S. 1,
7, 100 S.Ct. 1460, 64 L.Ed.2d 1 (1980) (citations omitted).
"While the Rule 60(b) standard is a more rigorous one because `
the concepts of finality . . . are more deeply implicated' in
default judgment cases, courts consider the same criteria when
applying either standard." Int'l Painters,
288 F. Supp. 2d at 26 (quoting Enron Oil Co. v. Diakuhara, 10 F.3d 90, 96 (2d Cir.
1993); citing CJC Holdings, Inc. v. Wright & Lato, Inc.,
979 F.2d 60, 64 (5th Cir. 1992)). The factors that must be balanced
are whether: (1) the default was willful; (2) the alleged defense
was meritorious; and (3) a set-aside would prejudice the
plaintiff. Jackson, 636 F.2d at 835 (quoting Keegel,
627 F.2d at 374); see also Resolution Trust Corp. v. Forest Grove, 33
.3d 284, 288 (3d Cir. 1994).
In this case, it is clear that Defendants' default was
culpable, willful, and without excuse. As emphasized by the
Second Circuit in Commercial Bank of Kuwait v. Rafidain Bank,
15 F.3d 238, 242-244 (2d Cir. 1994), a sovereign is not relieved
from the duty to defend cases and obey court orders even upon a
mistaken belief that it enjoyed sovereign immunity. Here, both
Iran and the MOIS were properly served with a copy of Plaintiff's
complaint and chose not to answer or respond otherwise.
Defendants, who are experienced litigants in the federal courts,
see Flatow v. Islamic Republic of Iran, 999 F. Supp. 2d 1, 6 n.
1 (D.D.C. 1998) ("The Islamic Republic of Iran is an experienced
litigant in the United States federal court system generally and
within this Circuit.") (citing cases), also made a decision not
to appeal this Court's December 2, 2002 judgment. As such, there
no question that Defendants' failure to respond to Plaintiff's
suit and eventual default was intentional. Further, upon a review
of the Court's December 2, 2002 findings of fact and conclusions
of law, it is clear that Defendants are without a meritorious
defense to Plaintiff's allegations; while it is clear that if
Plaintiff's case were brought today, her damage award would be
significantly reduced, Defendants' liability would not change.
Finally, a set-aside at this late point would certainly prejudice
Plaintiff, especially in light of her diligence in bringing her
suit. Accordingly, none of the three factors traditionally
considered within this Circuit favor displacing Plaintiff's
hard-won default judgment.
However, despite the fact that Defendants have not entered this
suit and have not filed any motion attempting to displace the
default judgment entered against them, Rule 60(b) does allow a
court to set aside a final judgment "upon such terms as are
just." See Fed.R.Civ.P. 60(b). However, a court should cabin
itself to the relief provided in Rule 60(b) when taking such a
significant step. Rule 60(b) enumerates only six grounds for
obtaining relief from a final judgment: (1) mistake,
inadvertence, surprise, or excusable neglect; (2) newly
discovered evidence; (3) fraud or misconduct by the party; (4)
the judgment is void; (5) the judgment has been satisfied or it
is not longer equitable for the judgment to have forward
application; or (6) any other reasoning justifying relief from
the operation of the judgment. Id. Reasons (1) through (3) are clearly inapplicable to the facts
of this case; moreover, Rule 60(b) explicitly requires a motion
to be made within one year of the final judgment to use those
grounds as a mechanism to challenge the final judgment. See id.
As such, the grounds for relief specified in Federal Rule of
Civil Procedure 60(b)(1)-(3) have no relevance to these
proceedings. Upon a review, reasons (4) through (6) are clearly
inapplicable as well.
Pursuant to Rule 60(b)(4), a judgment may be vacated where the
judgment is "void." See Fed.R.Civ.P. 60(b)(4). Importantly,
"[a] judgment is void only if the issuing court lacked
subject-matter jurisdiction over the action or if the judgment
was otherwise entered in violation of due process." Ministry of
Def. & Support for the Armed Forces of the Islamic Republic of
Iran v. Cubic Def. Sys., 385 F.3d 1206, 1226 (9th Cir. 2004)
(citing Tomlin v. McDaniel, 865 F.2d 209, 210 (9th Cir. 1989));
see also Adair v. England, 209 F.R.D. 1, 4 (D.D.C. 2000);
Eberhardt v. Integrated Design & Constr. Co., 167 F.3d 861, 871
(4th Cir. 1999). "A judgment is not void because it is
erroneous." 11 Charles Alan Wright, Arthur R. Miller, & Mary Kay
Kane, Federal Practice and Procedure § 2862, at 326 (2d ed.
1995); United States v. Holtzman, 762 F.2d 720, 72 (9th Cir.
1985). When this Court entered judgment in favor of Plaintiff on
December 2, 2002, it had subject-matter jurisdiction over
Plaintiff's claims, and the D.C. Circuit's subsequent decision in
Ciccippio-Puleo did not change this fact. See Cicippio-Puleo,
353 F.3d at 1034 ("[28 U.S.C. § 1605(a)(7)] confers
subject-matter jurisdiction over [lawsuits for damages for
certain enumerated acts of terrorism], but does not create a
private right of action."). Moreover, in issuing the default
judgment in favor of Plaintiff, this Court acted in accordance
with due process. As such, Plaintiff's default judgment cannot be
considered void, and cannot be vacated pursuant to Rule 60(b)(4).
See Cubic Def. Sys., 385 F.3d at 1225-26 (refusing to vacate pre-Cicippio-Puleo decisions against Iran in the United States
District Court for the District of Columbia under Rule 60(b)(4)).
Rule 60(b)(5) is applicable when the judgment is based on a
prior action that has been satisfied, reversed, or vacated. See
NLRB v. Harris Teeter Supermarkets, 215 F.3d 32, 35 (D.C. Cir.
2000). Plaintiff's judgment has certainly not been satisfied, and
the application of Rule 60(b)(5) is otherwise limited to a
judgment that has been reversed or otherwise vacated based in
the sense of res judicata, collateral estoppel, or somehow part
of the same proceeding. See supra Wright et al., Federal
Practice and Procedure § 2863, at 332-50; 7 J. Moore & J. Lucas,
Moore's Federal Practice § 60.26 at 60-246 to 60-248 (1987);
see also Werner v. Cabo, 731 F.2d 104, 207-08 (4th Cir. 1984).
The relationship between the present judgment and the prior
judgment must be closer than that of a later case relying on the
precedent of an earlier case; rather, "the prior judgment must be
a necessary element of the decision, giving rise, for example, to
the cause of action or a successful defense." Lubben v.
Selective Serv. Sys. Local Bd. No. 27, 453 F.2d 645, 650 (1st
Cir. 1972). In this case, while the Court certainly cited to
numerous other decisions in support of its ultimate legal
conclusions provided in the December 2, 2002 final judgment,
those cited cases amounted to no more than persuasive precedents
in support of the Court's position; no single case provided a
necessary element for the Court's decision. As such, the Court
considers Section 60(b)(5) to be without applicability in this
Finally, Rule 60(b)(6) is a catch-all provision, meant to
encompass circumstances not covered by Rule 60(b)'s other
enumerated provisions. In doing so, it provides that a court may
act to relieve a party from a final judgment for "any other
reason justifying relief from the operation of the judgment."
Fed.R.Civ.P. 60(b)(6). Importantly, Rule 60(b)(6) is available only in cases evidencing "extraordinary circumstances." See,
e.g., Pioneer Inv. Serv. Co. v. Bunrswich Assoc., 507 U.S. 380,
393, 113 S.Ct. 1489, 123 L.Ed.2d 74 (1993); Hess v. Cockrell,
281 F.3d 212, 216 (5th Cir. 2002) (citing Batts v. Tow-Motor
Forklift Co., 66 F.3d 743, 747 (5th Cir. 1995));
Martinez-McBean v. Gov't of the Virgin Islands, 562 F.2d 908,
911 (3d Cir. 1977) (citing numerous cases); see also supra
Wright et al., Federal Practice and Procedure § 2864, at 357.
When evaluating the circumstances surrounding Plaintiff's case,
it is important to note that at the time Plaintiff obtained her
judgment on December 2, 2002, the federal court decisions in the
D.C. Circuit were uniform in finding there to be a federal
cause-of-action against state sponsors of terrorism under Section
1605(a)(7) and the Flatow Amendment. See, e.g., Dammarell v.
Islamic Republic of Iran, 281 F. Supp. 2d 105, 194 (D.D.C. 2003)
("Dammarell I"); Cronin v. Islamic Republic of Iran,
238 F. Supp. 2d 222, 231 (D.D.C. 2003); Regier v. Islamic Republic of
Iran, 281 F. Supp. 2d 87, 98-99 (D.D.C. 2003); Kilburn v.
Republic of Iran, 277 F. Supp. 2d 24, 36-41 (D.D.C. 2003). The
Cicippio-Puleo decision that no federal cause-of-action exists
under these statutory provisions represents a change or
development in the judicial view of the law that existed at the
time this Court granted judgment in favor of Plaintiff.
It is well-established that a change in the judicial view of
the law, such as that enunciated by the D.C. Circuit in
Cicippio-Puleo, is rarely if ever a proper basis for relief
under Federal Rule of Civil Procedure 60(b)(6) from a final,
unappealed judgment. See Agostini v. Felton, 521 U.S. 203, 239,
117 S.Ct. 1997, 138 L.Ed.2d 391 (1997) ("Intervening developments
in the law by themselves rarely constitute the extraordinary
circumstances required for relief under Rule 60(b)(6).");
Johnson v. Ashcroft, 223 F. Supp. 2d 116, 117 (D.D.C. 2002);
Ctr. for Nat'l Policy Review on Race & Urban Issues v.
Richardson, 534 F.2d 351, 352-53 (D.C. Cir. 1976) (per curium); DeWeerth v. Baldinger, 38 F.3d 1266, 1272-73 (2d Cir.
1994); Hess, 281 F.3d at 216; Martinez-McBean,
562 F.2d at 911; J. Moore et al., Federal Practice § 60.48[b], at 60-181
(3d ed. 1997) (collecting cases). The correction of legal errors
committed by district courts is a function of the courts of
appeal and does not warrant relief pursuant to Rule 60(b)(6).
See Hess, 281 F.3d at 216; Martinez-McBean, 562 F.2d at 911.
Here, Defendants had an opportunity to appeal and chose not to do
so: when a party makes a strategic decision not to appeal, it is
not the job of district courts to use Rule 60(b)(6) to correct
judgments that may have ultimately been proven to be legally
erroneous. See Matarese v. LeFevre, 801 F.2d 98, 107 (2d Cir.
1986), cert. denied, 480 U.S. 908, 106 S.Ct. 1353,
94 L.Ed.2d 523 (1987).
Accordingly, the Court concludes that it lacks the power, under
either Federal Rule of Civil Procedure 55(c) or 60(b) to upset
the final judgment awarded Plaintiff on December 2, 2002, and to
do so otherwise would constitute an abuse of discretion. As such,
the Court shall overrule its March 31, 2004 preliminary "finding"
that "the December 2, 2002, Default Judgment against the Islamic
Republic of Iran and the Iran Ministry of Information and
Security, in light of the District of Columbia Court of Appeal's
decision in Cicippio-Puleo v. Islamic Republic of Iran,
353 F.3d 1024, 1033 (D.C. Cir. 2004), should be vacated." See Rafii
v. Islamic Republic of Iran, Civ. No. 01-850, at 3 n. 2 (D.D.C.
Mar. 31, 2004) (order). Plaintiff's December 2, 2002 final
judgment shall therefore stand. B. The United States's Motion to Quash Plaintiff's Writs of
After the flurry of Orders, motions, oppositions, and
concessions regarding Plaintiff's writs of attachment issued in
this case, two issues remain pending for the Court's resolution:
(1) whether the Third and Fourth Accounts are subject to
attachment by Plaintiff under the TRIA, and (2) whether the
Iranian diplomatic and consular properties identified by
Plaintiff that have been leased to third parties are subject to
attachment under the TRIA. The Court shall deal with each issue
1. The Third and Fourth Accounts
Given that Plaintiff's previous concessions have been limited
specifically to the First and Second Accounts, as identified in
the filings made by the parties and in the Answers to
Interrogatories in Attachment filed by the Bank of America, the
issue of Plaintiff's writs of attachment vis-á-vis the Third and
Fourth Accounts remains pending. Upon an examination of the
relevant facts surrounding this issue, the statutes and treaties
implicated by Plaintiff's attachment, and the Executive Branch's
interpretation of its obligations, the Court concludes that the
Third and Fourth Accounts fall within the exclusion provided by
Section 201(d) of the TRIA and therefore cannot be attached. As
such, any writ of attachment by Plaintiff implicating the Third
and Fourth Accounts must be quashed.
The TRIA enables judgment creditors to execute on or attach
certain "blocked assets" to satisfy outstanding judgments.
Specifically, Section 201(a) of the TRIA provides:
IN GENERAL. Notwithstanding any other provision of
law, and except as provided in subsection (b), in
every case in which a person has obtained a judgment
against a terrorist party on a claim based upon an
act of terrorism, or for which a terrorist party is
not immune under section 1605(a)(7) of title 28,
United States Code, the blocked assets of that
terrorist party (including the blocked assets of any agency or instrumentality of that terrorist
party) shall be subject to execution or attachment in
aid of execution in order to satisfy such judgment to
the extent of any compensatory damages for which such
terrorist party has been adjudged liable.
Pub.L. No. 107-297, § 201(a), 116 Stat. at 2337. A "blocked
asset" is defined as "any asset seized or frozen by the United
States under . . . the International Emergency Economic Powers
Act (50 U.S.C. 1701; 1702);" however, a "blocked asset" does not
include property that "in the case of property subject to the
Vienna Convention on Diplomatic Relations or the Vienna
Convention on Consular Relations, or that enjoys equivalent
privileges and immunities under the law of the United States, is
being used exclusively for diplomatic and consular purposes."
Pub.L. No. 107-297, § 201(d)(2), 116 Stat. at 2339-40. Upon a
review, the Third and Fourth Accounts fall within this exclusion.
First, the Third and Fourth Accounts held by the Bank of
America are clearly subject to the United States's obligations
under the Vienna Conventions. Where, as was the case with Iran,
diplomatic relations between the United States and a foreign
country are severed, the United States has an international legal
obligation under the Vienna Convention on Diplomatic Relations
and the Vienna Convention on Consular Relations to protect the
foreign country's diplomatic and consular missions, their
premises, and their property in the United States. See Art.
45(a), Vienna Convention on Diplomatic Relations, 23 U.S.T. 3227,
T.I.A.S. No. 7502 (Apr. 18, 1961); Art. 27(1)(a), Vienna
Convention on Consular Relations, 21 U.S.T. 77, T.I.A.S. No. 6820
(Apr. 24, 1963).
As outlined in the Taylor Declaration, Gov't Mem. in Support of
Mot. to Quash, Ex. 9 ("Taylor Decl."), the Third and Fourth
Accounts were licensed for consular use shortly after the issuance of the November 14, 1979 Blocking Order. See Taylor
Decl. ¶¶ 28-29. A license was issued to the Continental Illinois
National Bank & Trust to permit the Consulate General of Chicago
to operate its account for the consulate's lawful operations in
the United States. Id. ¶ 29 & Ex. 6. Continental National Bank
& Trust was later acquired by Bank of America, passing this
account ("the Third Account") to the Bank of America. Id. ¶ 29.
A license was also issued to the Bank of America to permit the
Consulate General of San Francisco to operate its accounts for
the consulate's lawful official operations in the United States
("the Fourth Account"). Id. ¶ 29 & Ex. 7. As such, in light of
the clear intent that these accounts were to be used for the
official businesses of the consular offices with which they were
associated, the Court concludes that they constitute "property of
the consular post" as specified in the Vienna Conventions.
Moreover, the Court is convinced that these accounts are being
"used exclusively for consular and diplomatic purposes" for two
reasons. First, while these accounts have been presumably
inactive since the severance of diplomatic relations with Iran in
1980, they were not transferred upon the signing of the Algiers
Accords. Instead, the Third and Fourth Accounts remain blocked by
the United States in furtherance of its obligations to "protect
and preserve" foreign government consular property in light of
the failure of Iran and the United States to reach some other
arrangement regarding their respective properties. Id. ¶¶ 6,
9-10, 36-37. Accordingly, it is clear that the United States
government interprets its duty under the Vienna Conventions to
continue to respect and protect these property until some further
agreement. Second, Iran has filed a claim in the Iran-U.S. Claims
Tribunal, which was created by the Algiers Accords, concerning
its diplomatic and consular properties that remain in the United
States. Id. ¶ 37. Importantly, this claim includes the Third
and Fourth Accounts. Id. As such, dissipating these properties prior to the resolution of this process would
compromise these proceedings, exacerbate a diplomatic relations
problem, and override part of the diplomatic functioning of the
United States. See id. ¶¶ 13, 36-37 (noting that continued
blocking of Iran's property in the United States is essential to
preserving the United States's position both in the Tribunal
proceedings and under the Vienna Conventions, and to ensuring the
protection of its rights with regard to its own diplomatic and
consular property in Iran).
The Court is aware that the court in Weinstein v. Islamic
Republic of Iran, 274 F. Supp. 2d 53 (D.D.C. 2003), temporarily
allowed the attachment of the funds located in the Third and
Fourth Accounts, see id. at 61-62, though the writs at issue
were later quashed on other grounds. The Weinstein court
reasoned that these funds could be attached because: (1) it
believed that the Vienna Conventions only required that the
United States protect the "premises of the mission" itself, i.e.,
the buildings and land of the consulate, and not the kind of
funds contained within the Third and Fourth Accounts, and (2) it
concluded that the fact that the accounts were dormant and not
presently in use for any diplomatic or consular purpose meant
that they could not be exempt from the TRIA's definition of
"blocked assets." Id. The Court finds both of these conclusions
to be erroneous. First, the language of the Vienna Conventions
clearly requires the protection of all diplomatic and consular
property not just the physical premises of the mission. See
Art. 45(a), Vienna Convention on Diplomatic Relations, 23 U.S.T.
3227, T.I.A.S. No. 7502 ("If diplomatic relations are broken off
between two States, or if a mission is permanently or temporarily
recalled: (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") (emphasis added);
Art. 27(1)(a), Vienna Convention on Consular Relations, 21 U.S.T.
77, T.I.A.S. No. 6820 ("In the event of a severance of consular relations between the two
States: (a) the receiving State shall, even in the case of armed
conflict, respect and protect the consular premises, together
with the property of the consular post and the consular
archives") (emphasis added). Second, even though dormant, the
accounts are still "being used exclusively for diplomatic and
consular purposes," Pub.L. No. 107-297, § 201(d)(2), 116 Stat.
at 2339-40, as they are being maintained in a blocked status
solely for the diplomatic purpose of "respect[ing]" and
"protect[ing]" that property as required by the Vienna
Conventions and preserving U.S. claims within Iran.
Given these facts, the Court concludes that because the Third
and Fourth Accounts were previously used to fund Iran's consular
operations and are now being "used" through their preservation to
fulfill the United States's diplomatic purpose of complying with
the Vienna Conventions and its obligations under the Algiers
Accords, they are not subject to attachment under the TRIA.
Accordingly, the funds at issue fall within the exemption
provided by Section 201(d), and Plaintiff's remaining writs of
attachment as they implicate the Third and Fourth Accounts
must be quashed.
2. Iranian Diplomatic and Consular Properties Leased to Third
In its initial motion to quash, the United States identified
five Iranian diplomatic properties in the District of Columbia
that are currently in the custody of the Department of State, and
which would be subject to Plaintiff's writ of attachment served
on the Department of State. Of these five properties, four are
leased to third parties while the other remains a vacant lot.
Taylor Decl. ¶¶ 15-19. Plaintiff claims that these assets fall
within the attachable category of "blocked assets" because (1)
they fall within Executive Order 12170 and (2) the fact that they
are being used by third parties i.e., for "non-diplomatic
purposes" means that these properties therefore fall outside of the "diplomatic purposes" exemption
provided in Section 201(d) of the TRIA. As such, Plaintiff
asserts that these properties are ripe for attachment.
Upon a review of the issues, the Court concludes that these
properties in question are "being used exclusively for diplomatic
or consular purposes," Pub.L. No. 107-297, § 201(d)(2), 116
Stat. at 2339-40, and are therefore exempt from attachment under
the TRIA despite the fact that some of these properties are being
rented to third-parties. Importantly, the United States is
charged under the Vienna Conventions with protecting and
respecting Iranian diplomatic property despite the breakdown of
relations between the two countries. In order to do so, the
Office of Foreign Missions the agency charged with carrying out
this responsibility has determined that the best course of
action would be to lease out or hold these properties because in
renting and/or holding these properties, as opposed to selling
them, the United States accomplishes at least two different
purposes: (1) it ensures that the properties remain within its
ultimate control, protecting the property for a presumptive
future time when Iran and the United States resume diplomatic and
consular relations; and (2) it uses the funds earned to carry out
routine maintenance on the properties, thereby "respect[ing] and
protect[ing]" the property as required. Accordingly, even though
some of the properties identified have been leased to
third-parties, ultimately they are still being used "exclusively
for diplomatic purposes" and thereby fall outside of the
definition of "blocked assets" for the purposes of the TRIA. As
such, Plaintiff's writs of attachment on these and similar
properties must be quashed. See Hegna v. Islamic Republic of
Iran, 376 F.3d 485, 493-96 (5th Cir. 2004) (holding that
although the United States has leased Iranian property to
"private parties and has used some of those rental proceeds to
satisfy domestically-created obligations, it has used the
consular residence `exclusively for diplomatic or consular purposes'"); Hegna v. Islamic Republic of
Iran, 287 F. Supp. 2d 608, 609-11 (D.Md. 2003) (same); Mousa v.
Islamic Republic of Iran, Civ. No. 00-2096 (D.D.C. Nov. 5, 2003)
(Bryant, J.) (same); Elahi v. Islamic Republic of Iran, Civ.
No. 99-2082, 2003 U.S. Dist. LEXIS 25813 (D.D.C. July 22, 2003)
(same); Hegna v. Islamic Republic of Iran, Civ. No. 00-716,
2004 U.S. Dist. LEXIS 15947 (D.D.C. Mar. 22, 2004) (same).
For the reasons set forth above, (1) the Court holds that the
judgment entered in favor of Plaintiff on December 2, 2002 shall
stand, and any contrary language previously used by this Court
suggesting that such a judgment might be vacated is hereby
rendered inoperative; and (2) the Court rules that to the extent
that its previous Orders had not fully granted  the United
States's Third Motion to Quash,  the United States's Third
Motion to Quash is GRANTED in full and all identified writs of
attachment are QUASHED. An Order accompanies this Memorandum
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