Calderon–Cardona v. JPMorgan Chase Bank, N.A.
| Citation | 867 F.Supp.2d 389 |
| Decision Date | 07 December 2011 |
| Docket Number | No. 11 Civ. 3283 (DLC).,11 Civ. 3283 (DLC). |
| Parties | RUTH CALDERON–CARDONA, et al., Petitioners/Judgment Creditors, v. JPMORGAN CHASE BANK, N.A., Respondent/Garnishee. Ruth Calderon–Cardona, et al., Petitioners/Judgment Creditors, v. The Bank of New York Mellon, Respondent/Garnishee. Ruth Calderon–Cardona, et al., Petitioners/Judgment Creditors, v. HSBC, Respondent/Garnishee. Ruth Calderon–Cardona, et al., Petitioners/Judgment Creditors, v. Standard Chartered, Respondent/Garnishee. Ruth Calderon–Cardona, et al., Petitioners/Judgment Creditors, v. Deutsche Bank Trust Company Americas, Respondent/Garnishee. Ruth Calderon–Cardona, et al., Petitioners/Judgment Creditors, v. UBS AG, Respondent/Garnishee. Ruth Calderon–Cardona, et al., Petitioners/Judgment Creditors, v. Citibank, N.A., Respondent/Garnishee. Ruth Calderon–Cardona, et al., Petitioners/Judgment Creditors, v. Intesa Saopaolo, Respondent/Garnishee. Ruth Calderon–Cardona, et al., Petitioners/Judgment Creditors, v. Bank of China, Respondent/Garnishee. |
| Court | U.S. District Court — Southern District of New York |
OPINION TEXT STARTS HERE
Robert Joseph Tolchin, Robert J. Tolchin, Esq., New York, NY, for Petitioners/Judgment Creditors.
Howard B. Levi, J. Kelley Nevling, Jr., Levi Lubarsky & Feigenbaum LLP, New York, NY, for Respondent/Garnishees JP Morgan Chase Bank, N.A. and The Bank of New York Mellon.
Paul Kenneth Stecker, Phillips Lytle LLP, Tamara Anne Daniels, New York, NY, for Respondent/Garnishee HSBC.
Barry Jay Glickman, Bruce Seth Goodman, Zeichner Ellman & Krause LLP, New York, NY, for Respondent/Garnishee Standard Chartered.
Mark Putnam Gimbel, Covington & Burling LLP, New York, NY, for Respondent/Garnishee Deutsche Bank Trust Company Americas.
Samuel Bayard, Sharon L. Schneier, Davis Wright Tremaine LLP, New York, NY, for Respondent/Garnishee UBS AG.
Samuel Bayard, Sharon L. Schneier, Davis Wright Tremaine LLP, New York, NY, for Respondent/Garnishee Citibank, N.A.
Jane Marion Morril, Jennifer Gillian Newstead, Davis Polk & Wardwell L.L.P., New York, NY, for Respondent/Garnishee Intesa Saopaolo.
Lanier Saperstein, Allen & Overy, LLP, New York, NY, for Respondent/Garnishee Bank of China.
These actions arise out of the efforts of the families and victims of a terrorist attack in Israel to satisfy a judgment entered against the Democratic Republic of North Korea (the “DPRK”) and its main intelligence agency, the Cabinet General Intelligence Bureau (“CGIB”) (for sake of convenience, this Opinion refers to the DPRK and the CGIB together as simply “North Korea”). The petitioners seek to satisfy the judgment by seizing accounts at the respondent banks that contain funds blocked pursuant to sanctions imposed by the U.S. Government against the DPRK. For the following reasons, the petitions are denied.
The petitioners are the families and estates of two American citizens, Carmelo Calderon–Molina (“Calderon–Molina”) and Pablo Tirado–Ayala (“Tirado–Ayala”), who were killed in a terrorist attack on Israel's Lod Airport on May 30, 1972. Tirado–Ayala and Calderon–Molina had just arrived at Lod Airport and were collecting their luggage when terrorists affiliated with the Japanese Red Army and the Popular Front for the Liberation of Palestine opened fire, killing Calderon–Molina and wounding Tirado–Ayala.
Their families and estates brought suit against the DPRK and the CGIB on March 27, 2008, pursuant to the Foreign Sovereign Immunities Act (“FSIA”), 28 U.S.C. §§ 1330, 1332, 1391(f), 1441(d), 1602–11, in the United States District Court for the District of Puerto Rico. The families alleged that the DPRK and the CGIB provided material support to the terrorists by supplying them with the armaments used to carry out the attack. On July 16, 2010, the district court entered judgment (the “Judgment”) for the families in the amount of $378 million. See Calderon–Cardona v. Democratic People's Republic of Korea, 723 F.Supp.2d 441, 460–85 (D.P.R.2010). The Judgment remains entirely unsatisfied.
On October 28, 2010, the Judgment was registered in the Southern District of New York pursuant to 28 U.S.C. § 1963. The petitioners then served a subpoena on the United States Treasury Department's Office of Foreign Assets Control (“OFAC”), seeking the identities of all financial institutions that held the proceeds of electronic fund transfers (“EFTs”) that were blocked pursuant to sanctions against the DPRK, called the North Korean Sanctions Regulations (“NKSRs”).1 The OFAC produced a list of financial institutions in response to the subpoena; on February 18, 2011, the petitioners filed petitions in the Southern District requesting an order directing the respondent banks to turn over the proceeds of these blocked EFTs (“the blocked EFTs”) pursuant to § 201 of the Terrorism Risk Insurance Act of 2002 (“TRIA”), Pub. L. No. 107–297; § 1610(g) of FSIA; and N.Y. C.P.L.R. §§ 5225(b) and 5227.
On February 24, the Honorable Richard Berman, acting as Part I Judge, issued an Order to Show Cause. The Order to Show Cause was served on the respondents on March 2. On May 12, respondent Intesa Saopaolo entered into a stipulation with petitioners to resolve the action against it and to relieve it of the obligation of appearing in this matter. Also on May 12, the Honorable Richard Holwell issued an order consolidating the related actions; on May 24, the cases were assigned to this Court. On various dates from May through July, the respondents filed answers to the petition.
During a conference on July 7, the Court determined that it would rule on the threshold question of whether the Order to Show Cause establishes, as a matter of law, that the blocked EFTs can be subject to attachment. It was also determined that the Court would postpone addressing the issue of providing notice to third parties that might have an interest in the blocked EFTs. The respondents were invited to submit new or revised briefs in support of their previously-filed oppositions to the Order to Show Cause. They were also invited to join in each other's briefs to avoid duplicative filings. On August 11, respondent JPMorgan Chase Bank, N.A. filed an additional memorandum of law in support of its opposition to the Order to Show Cause. The other respondents joined in this submission. The petitioners filed a reply on September 23. Respondents JPMorgan Chase Bank, N.A. and Deutsche Bank Trust Company Americas filed briefs in further support of their opposition to the Order to Show Cause on October 7, and were joined by the other respondents.
Under Federal Rule of Civil Procedure 69, New York law provides the procedural rules to be followed in this matter. N.Y. C.P.L.R. §§ 5225(b) and 5227 allow for a judgment creditor to file a petition for turnover of property in the hands of a third-party who either “possesses money or property in which the judgment debtor has an interest,” N.Y. C.P.L.R. § 5225(b), or “is or will become indebted to the judgment debtor.” N.Y. C.P.L.R. § 5227.
Pursuant to Rule 69, federal law governs these proceedings “to the extent it applies.”Fed.R.Civ.P. 69(1). The petitioners argue that the blocked EFTs are attachable under § 201 of TRIA and § 1610(g) of FSIA. Because the blocked EFTs do not constitute property subject to attachment under either statute, however, the petitions must be dismissed.
The role of a court is “to interpret the language of the statute enacted by Congress.” Barnhart v. Sigmon Coal Co., Inc., 534 U.S. 438, 461, 122 S.Ct. 941, 151 L.Ed.2d 908 (2002). Statutory interpretation must “begin with the language employed by Congress and the assumption that the ordinary meaning of that language accurately expresses the legislative purpose.” Engine Mfrs. Ass'n v. S. Coast Air Quality Mgmt. Dist., 541 U.S. 246, 252, 124 S.Ct. 1756, 158 L.Ed.2d 529 (2004) (citation omitted).
Section 201 of TRIA provides as follows:
Notwithstanding any other provision of law, ... 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.
TRIA § 201(a), 116 Stat. 2337.
Pursuant to the plain language of this section of TRIA, property is attachable only in those cases in which (1) “a judgment has been obtained,” (2) this judgment is “against a terrorist party,” (3) the judgment is “on a claim based upon an act of terrorism” or “for which a terrorist party is not immune” under FSIA § 1605(a)(7),2 (4) the property in question consists of “blocked assets,” and (5) these blocked assets are “of that terrorist party.” This final requirement does not exclude assets that are “of any agency or instrumentality of that terrorist party.”
The petitioners cannot meet these statutory requirements because the blocked assets in question are not “of that terrorist party.” TRIA § 201(d) defines the term “terrorist party” as
a terrorist, a terrorist organization (as defined in section 212(a)(3)(B)(vi) of the Immigration and Nationality Act (8 U.S.C. 1182(a)(3)(B)(vi))), or a foreign state designated as a state sponsor of terrorism under section 6(j) of the Export Administration Act of 1979 (50 U.S.C.App. 2405(j)) or Section 620A of the Foreign Assistance Act of 1961 (22 U.S.C. 2371).
TRIA § 201(d)(4). Under this definition, North Korea plainly does not qualify as a “terrorist” because it is not a natural person. Nor is North Korea a “terrorist organization.” Section 212(a)(3)(b)(vi) of the Immigration and Nationality Act (“INA”) is aimed at non-governmental groups...
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