Abecassis v. Wyatt

• Decision Date: 30 September 2012
• Docket Number: Civil Action No. H–09–3884.
• Citation: 902 F.Supp.2d 881
• Parties: Odelia ABECASSIS, et al., Plaintiffs, v. Oscar S. WYATT, Jr., et al., Defendants.
• Court: U.S. District Court — Southern District of Texas

902 F.Supp.2d 881

Odelia ABECASSIS, et al., Plaintiffs,

v.Oscar S. WYATT, Jr., et al., Defendants.

Civil Action No. H–09–3884.

United States District Court,

S.D. Texas,

Houston Division.

Sept. 30, 2012.

Michael J. Miller, David J. Dickens, The Miller Law Firm, Orange, VA, Bena Ochs, Gavriel Mairone, MM-Law LLC, Chicago, IL, Dale Jefferson, Raul Herman Suazo, Martin Disiere et al, Houston, TX, for Plaintiffs.

Carl A. Parker, Parker Law Firm, Port Arthur, TX, Don Chapple Nelson, Attorney at Law, Houston, TX, for Defendants.

MEMORANDUM AND OPINION

LEE H. ROSENTHAL, District Judge.

This suit arises out of terrorist attacks in Israel between 2000 and 2002.The plaintiffs are Americans injured in the attacks and their relatives.The defendants are companies and individuals involved in the oil and gas business.The plaintiffs allege that these defendants used the United Nations Oil–for–Food Program to purchase oil from Iraq with payments that included illegal kickbacks to a secret bank account controlled by Saddam Hussein.The plaintiffs allege that Hussein used funds from this account to provide money and services to Palestinian terrorist organizations and to make payments to the families of suicide bombers and others killed in carrying out the terrorist attacks.According to the plaintiffs, such payments were important in recruiting terrorists.

In their amended complaint, the plaintiffs alleged that the defendants violated the Antiterrorism Act (“ATA”) by providing material support to terrorist organizations and by engaging in illegal financial transactions with Iraq.(Docket EntryNo. 121).¹The defendants moved to dismiss the amended complaint under Rule 12(b)(6).(Docket EntryNos. 127, 128, 130, 133, 134).This court denied the motions to dismiss except the conspiracy allegations and the allegations against Bayoil Supply & Trading and NuCoastal Panama based on violations of 18 U.S.C. § 2332(d).The court converted the motions to dismiss based on limitations to motions for summary judgment.

The issue on summary judgment is whether, as the defendants assert, the plaintiffs' claims are barred by the ATA's four-year limitations period.(Docket EntryNo. 172).The three terrorist attacks made the basis of this action occurred on November 4, 2001, December 1, 2001, and March 9, 2002.An ATA claim arising out of the third attack would have been timely filed as late as March 2006, but the original complaint in this case was not filed until January 2, 2009.The plaintiffs argue that because the defendants fraudulently concealed the facts giving rise to the ATA claims, equitable tolling applies to make the plaintiffs' complaint timely.The defendants respond that, even if they engaged in fraudulent concealment, the plaintiffs waited too long to sue.The defendants maintain that the plaintiffs were on notice of the facts underlying their claims more than four years before they filed suit.Alternatively, the defendants argue that, because the plaintiffs became aware of their claims before the limitations period ended, tolling doctrines do not provide them with the several years of additional time that elapsed before the plaintiffs filed their original complaint.

Based on a careful review of the pleadings; the motion, response, and reply; the arguments of counsel; and the relevant law, the court denies the defendants' joint motion for summary judgment.The reasons are explained below.

I.Background

Prior opinions have summarized the plaintiffs' factual allegations.Abecassis v. Wyatt,785 F.Supp.2d 614(S.D.Tex.2011);Abecassis v. Wyatt,704 F.Supp.2d 623(S.D.Tex.2010).The background is repeated here to the extent necessary for the limitations analysis.

A.The Iraq Oil–for–Food Program

Less than a week after Saddam Hussein invaded Kuwait on August 6, 1990, the United Nations issued economic sanctions precluding member states from buying Iraqi oil.(Docket EntryNo. 121, ¶ 145).On April 14, 1995, the U.N. Security Council adopted Resolution 986, lifting the embargo but restricting Iraq's ability to sell its oil.Iraq's government and the U.N. negotiated the details of the restrictions, resulting in a written agreementsome time in May 1996.This agreement led to the U.N. Oil–For–Food Program (“OFP”).Under the OFP, a new U.N. office was created to oversee Iraq's sale of oil and purchase of humanitarian goods.An escrow account was established at the New York branch of the Banque Nationale de Paris(“BNP”).The proceeds of Iraqi oil sales were to be deposited into the escrow account, which the U.N. monitored.Iraq could use the funds only to purchase food and other humanitarian goods.( Id.,¶¶ 153–55).The United States government allowed American individuals and companies to enter into executory contracts with Iraq to purchase oil or sell humanitarian goods, including food and medical supplies.These contracts required a license from the Treasury Department's Office of Foreign Assets Control(“OFAC”).OFAC evaluated these license applications in conjunction with the State and Commerce Departments and the U.N. committee responsible for overseeing the BNP account.The plaintiffs allege that OFAC issued approximately 1,050 specific licenses to American individuals and entities, including the defendants, for various aspects of the OFP.( Id.,¶¶ 156–60).

In December 1996, Iraq began selling oil through the OFP.Under the OFP, although buyers would send the money to buy oil to the BNP account in New York, Saddam Hussein's government retained the right to choose the buyers.Those selected had to purchase the oil at the Official Selling Price (“OSP”), which was determined by a U.N. committee.The plaintiffs allege that the U.N. “sought to set a price for Iraqi oil at the highest rate bearable by the market in order to maximize the revenue generated,” which “would increase the amount of humanitarian goods that could be purchased” and “minimize the potential for illegal kickbacks” to Saddam Hussein.Presumably, buyers already paying full market price would be unable or unwilling to pay more in kickbacks.( Id.,¶ ¶ 161–62).

The plaintiffs allege that many of the companies and individuals Iraq chose to receive “allocations” of Iraqi oil “were not otherwise involved in the oil industry [and] were able to reap large profits by selling their allocations of Iraqi oil to brokers and/or companies capable of transporting the oil to a refinery.”( Id.,¶ 162).Beginning in 2000, the plaintiffs allege, Iraqi officials conditioned oil allocations on the buyer's willingness to pay a “surcharge” to Hussein's government.These surcharges, calculated as a percentage of the total contract price, were not permitted under the OFP.The buyers allegedly paid these surcharges through “front companies” to bank accounts Hussein controlled.The plaintiffs also allege that Hussein charged “port fees” before allowing tankers to receive oil at Iraqi ports.Like the surcharges, the port fees were paid to Hussein instead of the OFP bank account.The plaintiffs allege that these surcharges and port fees were kickbacks and that the kickbacks were made possible by lobbying that persuaded the U.N. to select a below-market OSP.The plaintiffs also allege that at least some of the cost of these kickbacks was passed on by the direct purchasers to the next purchaser down the line.( Id.,¶¶ 163–68).

B.The Allegations as to the Defendants' Actions

Oscar Wyatt, a Texas oil trader, was the chairman and sole shareholder of Coastal Corporation.Wyatt later formed NuCoastal Corporation, a Houston energy company, and NuCoastal Trading, S.A., a Panama corporation.Both NuCoastal entities are also defendants.

The plaintiffs allege that when Iraq invaded Kuwait, Wyatt owed Iraq $90 million.After the U.N. sanctions froze Iraq's bank accounts, Wyatt began repaying the money directly to the Hussein government and not to the U.N.-controlled accounts.( Id.,¶¶ 139–43).Wyatt maintained a close relationship with Hussein while the U.N. embargo was in place, hoping that he would be rewarded with Iraqi oil-purchase contracts once the sanctions were lifted.This relationship extended to providing Hussein communications equipment and GPS devices in the mid–1990s, including an INMAR satellite, which Wyatt allegedly gave to the Iraqi ministry of oil and paid to operate.( Id.,¶ 143).

The plaintiffs allege that Wyatt lobbied the U.N. to lift its sanctions to make Iraqi oil available for purchase, and to reduce the OSP to a below-market level so that Iraq could extract surcharges from direct buyers while allowing those buyers to make a profit.( Id.,¶¶ 148–52, 210).The plaintiffs allege that Wyatt negotiated for and obtained allocations under the OFP in exchange for illegal surcharges, or kickbacks.Wyatt allegedly made the payments through “front companies”he controlled in Switzerland and Cyprus.( Id.,¶¶ 31–38).

Wyatt was prosecuted for his actions relating to the OFP.He pleaded guilty to conspiracy to commit wire fraud on October 1, 2007.( Id.,¶ 228).According to the amended complaint in this case, Wyatt has testified that he caused surcharge payments to be deposited in a Hussein-controlled bank account in Jordan.Wyatt acknowledged knowing that the payments violated the OFP and stated that he had intended to defraud the U.N. ( Id.).The plaintiffs also allege that Wyatt committed treason by giving Hussein information about American war plans.( Id.,¶ 146).

The plaintiffs make similar allegations against David Chalmers, an American businessman involved in oil and gas; Bayoil (USA), Inc., a Delaware company based in Houston that Chalmers owned; and Bayoil Supply & Trading Limited, a Bahamas affiliate of Bayoil USA, of which Chalmers was the sole director and shareholder.( Id.,¶¶ 28–29).On August 17, 2007, Chalmers and the Bayoil companies also pleaded guilty to conspiracy to commit wire fraud.According to the plaintiffs, Chalmers admitted that he had made...