495 F.3d 1024 (9th Cir. 2007), 03-55015, Ministry of Defense and Support for Armed Forces of Islamic Republic of Iran v. Cubic Defense Systems, Inc.

Docket Nº:03-55015.
Citation:495 F.3d 1024
Party Name:The MINISTRY OF DEFENSE AND SUPPORT FOR THE ARMED FORCES OF THE ISLAMIC REPUBLIC OF IRAN, as Successor in Interest to the Ministry of War of the Government of Iran, Plaintiff-Appellant, v. CUBIC DEFENSE SYSTEMS, INC., as Successor in Interest to Cubic International Sales Corporation, Defendant, v. Dariush Elahi, Intervenor-Appellee.
Case Date:May 30, 2007
Court:United States Courts of Appeals, Court of Appeals for the Ninth Circuit
 
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495 F.3d 1024 (9th Cir. 2007)

The MINISTRY OF DEFENSE AND SUPPORT FOR THE ARMED FORCES OF THE ISLAMIC REPUBLIC OF IRAN, as Successor in Interest to the Ministry of War of the Government of Iran, Plaintiff-Appellant,

v.

CUBIC DEFENSE SYSTEMS, INC., as Successor in Interest to Cubic International Sales Corporation, Defendant,

v.

Dariush Elahi, Intervenor-Appellee.

No. 03-55015.

United States Court of Appeals, Ninth Circuit.

May 30, 2007

Argued and Submitted Jan. 26, 2007.

Amended July 17, 2007.

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[Copyrighted Material Omitted]

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David J. Bederman, Law Office of David J. Bederman, Esq., Atlanta, GA (argued), Anthony J. Van Patten, Glendale, CA, Mina Amassi, Los Altos, CA, for the plaintiff-appellant.

Jonathan R. Mook, DiMuroGinsberg, P.C., Alexandria, VA (argued), Philip J. Hirschkop, Hirschkop & Assoc., P.C., Alexandria, VA, for the intervenor-appellee.

Lewis S. Yelin, Dept. of Justice, Civil Division, Washington, DC (argued), Peter D. Keisler, Assistant Attorney General, Carol C. Lam, United States Attorney, Douglas N. Letter, Appellate Litigation Counsel, for United States as amicus curiae.

Appeal from the United States District Court for the Southern District of California; Rudi M. Brewster, District Judge, Presiding. D.C. No. CV-98-01165-RMB.

Before: B. FLETCHER, KIM McLANE WARDLAW, and RAYMOND C. FISHER, Circuit Judges.

ORDER

The opinion filed on May 30, 2007 is amended as follows:

On slip opinion page 6405, footnote 2, line 2, replace the phrase ", not against private parties" with "and counterclaims arising from the same transactions." At the end of that paragraph after " See Claims Settlement Declaration ... http://www.iusct.org/claims-settlement.pdf" add the following citation:; " see also Case A/2, 1 Iran-U.S.C.T.R. 101, Dec. 1-A2-FT (Jan. 26, 1982)."

On slip opinion page 6410, line 19, beginning with "Further, as noted supra, the Tribunal has no jurisdiction over claims against private parties" add, "having jurisdiction only to hear counterclaims against such parties."

On slip opinion page 6415, line one, from ("Subsequently, President Carter issued Executive Order 12,282 ..." and ending on line 31 with "... revoked or repealed"). "delete and replace with the following":

Following release of the hostages, the United States unblocked most Iranian assets and lifted the trade embargo. See Exec. Order Nos. 12,276-12,283, 46 Fed.Reg. 7913-7929 (Jan. 19, 1981); Iranian Assets Control Regulations, 46 Fed.Reg. 14330-14337 (Feb. 26, 1981) (codified at 31 C.F.R. pt. 535). However, military goods such as the ACMR remained blocked. See 22 U.S.C. §§ 2751 et seq. ; Exec. Order No. 12,170, 44 Fed.Reg. 65729 (Nov. 14, 1979); Notice

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of President, 70 Fed.Reg. 69039 (Nov. 9, 2005); International Traffic in Arms Regulations, 22 C.F.R. §§ 120-30; OFFICE OF FOREIGN ASSETS CONTROL, DEP'T. OF TREAS., FOREIGN ASSETS CONTROL REGULATIONS FOR EXPORTERS AND IMPORTERS 23 (2007) ("Certain assets related to these claims remain blocked in the United States and consist mainly of military and dual-use property").

The Ministry argues that the Cubic judgment is not a blocked asset under TRIA because Executive Order 12,282 unblocked certain Iranian assets. In support of its argument, MOD cites two cases in which district courts found that TRIA did not permit the attachment of Iranian property because the assets at issue did not fall within TRIA's definition of "blocked assets." See Bank of New York v. Rubin, 2006 WL 633315 (S.D.N.Y. Mar.15, 2006); Weinstein v. Islamic Republic of Iran, 299 F.Supp.2d 63 (E.D.N.Y.2004). However, the reasoning in those cases is inapplicable here. Iran's interest in the properties in question in Rubin and Weinstein arose after January 19, 1981, so Executive Order 12,282 unblocked those assets. In contrast, Iran's interest in the ACMR arose in October 1977 when Iran executed the contracts with Cubic or at the latest by October 4, 1978 when Iran made a payment of approximately $12,900,000 on the contracts. See MOD v. Cubic, 29 F.Supp.2d at 1170.

With these amendments, Judge Wardlaw has voted to deny the petition for rehearing en banc and Judge B. Fletcher has so recommended. Judge Fisher has voted to grant the petition for rehearing en banc.

The full court has been advised of the petition for rehearing en banc and no judge of the court has requested a vote on it.

The petition for rehearing en banc is DENIED. No further petitions for rehearing or for rehearing en banc may be filed.

OPINION

BETTY B. FLETCHER, Circuit Judge.

This case arises from Dariush Elahi's attempt to collect on a default judgment he holds against Iran. Elahi seeks to attach a $2.8 million judgment obtained in a contract dispute by the Iranian Ministry of Defense and Support of the Armed Forces of the Islamic Republic of Iran. The district court allowed Elahi to attach the judgment, holding that the Ministry had waived its immunity from attachment by submitting to the jurisdiction of the court. We have jurisdiction under 28 U.S.C. § 1291. For the reasons set forth below, we affirm the district court on the alternative ground that the judgment is subject to attachment under section 201 of the Terrorism Risk Insurance Act of 2002 ("TRIA"), Pub.L. No. 107-297, § 201, 116 Stat. 2322, 2337 (codified at 28 U.S.C. § 1610 note).

BACKGROUND

The Wrongful Death Default Judgment

Dr. Cyrus Elahi was shot and killed as he left his apartment building in Paris, France, on October 23, 1990. Elahi v. Islamic Republic of Iran, 124 F.Supp.2d 97, 103 (D.D.C.2000). His brother, Dariush Elahi, brought a wrongful death action against the state of Iran and the Iranian Ministry of Information and Security ("MOIS") in the United States District Court for the District of Columbia, claiming Iranian agents assassinated his brother. Id. at 97, 100. Although Iran and MOIS did not appear, the court heard testimony and read documentary evidence relating to the assassination; 1 this evidence

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satisfied the court that Iran and MOIS were liable for Dr. Elahi's death. Id. at 100-05, 114. It entered a default judgment against Iran and MOIS for $11.7 million in compensatory damages and punitive damages of $300 million. Id. at 115. It is this judgment that Elahi now seeks to satisfy by attaching the Cubic judgment.

The Contract Dispute between Cubic Defense Systems and the Iranian Ministry of Defense

In October 1977, the predecessor of the Iranian Ministry of Defense and Support of the Armed Forces of the Islamic Republic of Iran ("MOD" or "the Ministry") entered into two contracts with an American defense contractor, now known as Cubic Defense Systems ("Cubic"), for the sale and service of an Air Combat Maneuvering Range ("ACMR") for use by the Iranian Air Force. Ministry of Defense and Support for the Armed Forces of the Islamic Republic of Iran v. Cubic Defense Systems, Inc., 29 F.Supp.2d 1168, 1170 (S.D.Cal.1998). Iran made partial payment on the ACMR, but never received it; following the Iranian Revolution of 1979, Cubic breached its contract with the Ministry and sold the ACMR elsewhere. Id. In an attempt to recover the ACMR or its payments, Iran filed a claim against Cubic with the Iran-U.S. Claims Tribunal in The Hague, which was dismissed for lack of jurisdiction. 2 Id. Subsequently, Iran requested arbitration before the International Chamber of Commerce ("ICC") in Zurich. Id. Having conducted a hearing at which both parties were represented, the ICC issued an award for MOD, ordering Cubic to pay $2.8 million in damages for breach of contract. Id. at 1171. The Ministry reduced this ICC award to a judgment ("the Cubic judgment") in the United States District Court for the Southern District of California. Id. at 1170-74.

Elahi's attempt to attach the Cubic judgment

On November 1, 2001, Elahi sought a lien against the Cubic judgment to satisfy partially his judgment against Iran. MOD filed a motion seeking a judicial determination that the Cubic judgment is immune from attachment by Elahi. 3 Denying the motion, the district court ruled that in

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waiving its immunity from jurisdiction by submitting to ICC arbitration and seeking confirmation of the arbitration award in district court, MOD had also waived its immunity from attachment of its property. Ministry of Defense and Support for the Armed Forces of the Islamic Republic of Iran v. Cubic Defense Systems, Inc., 236 F.Supp.2d 1140, 1151-52 (S.D.Cal.2002).

The Ministry appealed, and we affirmed the district court's holding that Elahi could attach the Cubic judgment, although we relied on different grounds. 385 F.3d 1206 (9th Cir.2004) vacated and remanded, Ministry of Defense and Support for the Armed Forces of the Islamic Republic of Iran v. Elahi, 546 U.S. 450, 126 S.Ct. 1193, 163 L.Ed.2d 1047 (2006) (per curiam). Relying on the structure and traditional interpretation of the Foreign Sovereign Immunities Act ("FSIA"), we held that the two immunities are separate and that MOD's waiver of jurisdictional immunity did not waive its attachment immunity. Id. at 1219. Nonetheless, we affirmed the district court's determination that Elahi could attach the Cubic judgment on the ground that MOD, as an agency of Iran engaged in commercial activity in the United States, fell within a FSIA exception to immunity allowing attachment of certain property connected to commercial activity. See id. at 1219; see also 28 U.S.C. § 1610(b).

The Ministry appealed to the United States Supreme Court, which granted certiorari on the limited question of whether MOD constituted a foreign state or an agency or instrumentality of a foreign state. See Ministry of...

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