Estate of Heiser v. Islamic Republic of Iran, Nos. 00–cv–2329 (RCL), 01–cv–2104 (RCL).

CourtUnited States District Courts. United States District Court (Columbia)
Writing for the CourtROYCE C. LAMBERTH
Citation885 F.Supp.2d 429
PartiesESTATE OF Michael HEISER, et al., Plaintiffs, v. ISLAMIC REPUBLIC OF IRAN, et al., Defendants. Estate of Millard D. Campbell, et al., Plaintiffs, v. Islamic Republic Of Iran, et al., Defendants.
Docket NumberNos. 00–cv–2329 (RCL), 01–cv–2104 (RCL).
Decision Date31 August 2012

885 F.Supp.2d 429

ESTATE OF Michael HEISER, et al., Plaintiffs,
v.
ISLAMIC REPUBLIC OF IRAN, et al., Defendants.

Estate of Millard D. Campbell, et al., Plaintiffs,
v.
Islamic Republic Of Iran, et al., Defendants.

Nos. 00–cv–2329 (RCL), 01–cv–2104 (RCL).

United States District Court,
District of Columbia.

Aug. 31, 2012.


[885 F.Supp.2d 431]


Mark Charles Del Bianco, Kensington, MD, Richard Marc Kremen, David B. Misler, Melissa Lea Mackiewicz, Baltimore, MD, Shale D. Stiller, Elizabeth Renee Dewey, Washington, DC, for Plaintiffs.


MEMORANDUM OPINION

ROYCE C. LAMBERTH, Chief Judge.
I. INTRODUCTION

On the night of June 25, 1996, a tanker truck crept quietly along the streets of Dhahran, coming to rest alongside a fence surrounding the Khobar Towers complex, a residential facility housing United States Air Force personnel stationed in Saudi Arabia. A few minutes later, the truck exploded in a massive fireball that was, at the time, the largest non-nuclear explosion ever recorded on Earth. The devastating blast—felt up to twenty miles away—sheared the face off Building 131 of the Khobar Towers complex and left a crater more than eighty-five feet wide and thirty-five feet deep. The bombing killed nineteen U.S. military personnel and wounded more than 100. Subsequent investigations revealed that members of Hezbollah carried out the attack.

Four years after the bombing, plaintiffs—who are former service members injured in the attack, various family members, and the estates of those killed—brought suit under the “state-sponsored terrorism” exception to the Foreign Sovereign Immunities Act (“FSIA”), then codified at 28 U.S.C. § 1605(a)(7). Plaintiffs alleged that the Islamic Republic of Iran (“Iran”), the Iranian Ministry of Information and Security (“MOIS”), and the Iranian Islamic Revolutionary Guard Corps (“IRG”) provided material support and assistance to Hezbollah in carrying out the heinous attack. Following Iran's failure to appear and plaintiffs' presentation of evidence to substantiate their claims, the Court found that “the Khobar Towers bombing was planned, funded, and sponsored by senior leadership in the government of the Islamic Republic of Iran; the IRGC had the responsibility and worked with Saudi Hizbollah to execute the plan; and the MOIS participated in the planning and funding of the attack.” Heiser v. Islamic Republic of Iran, 466 F.Supp.2d 229, 265 (D.D.C.2006) (“Heiser I ”).1 The Court subsequently entered judgment against all defendants for $254 million in compensatory damages. Id. at 356.

A few years later, Congress passed the National Defense Authorization Act for Fiscal Year 2008 (“NDAA” or the “2008 Amendments”), which replaced § 1605(a)(7) with a new state-sponsored terrorism exception codified at 28 U.S.C. § 1605A, permitted recovery of punitive damages, and added a new provision concerning the enforcement of judgments. Pub.L. No. 110–181, § 1083, 122 Stat. 3, 338–44 (2008). Invoking the NDAA's procedures for retroactive application, in 2009 the Court entered an amended judgment, holding defendants jointly and severally liable for an additional $36 million in compensatory damages and $300 million in punitive damages. Heiser v. Islamic Republic of Iran, 659 F.Supp.2d 20, 31 (D.D.C.2009) (“Heiser II ”).

Following entry of final judgment, plaintiffs began their journey down the often-frustrating and always-arduous path shared by countless victims of state-sponsored

[885 F.Supp.2d 432]

terrorism attempting to enforce FSIA judgments. On August 10, 2011, this Court ordered Sprint Communications Company LP to turn over $613,587.38 owed to the Telecommunication Infrastructure Company of Iran. Heiser v. Islamic Republic of Iran, 807 F.Supp.2d 9 (D.D.C.2011)( Heiser III ).2 While this clearly represented a victory for the plaintiffs, this Court noted that “the bleak reality is that today's decisions comes after more than a year of litigation and results in a turnover of funds amounting to less than one-tenth of one-percent of what plaintiffs are entitled to....” Id. at 27.

The matter before the Court today requires exploration of two attempts by Congress to aid these victims: Terrorism Risk Insurance Act of 2002 § 201 (“TRIA”), and FSIA § 1610(g). In accordance with these statutes, plaintiffs ultimately seek the turnover of funds held in various blocked accounts at Wells Fargo, N.A., and Bank of America, N.A. (collectively, “the Banks”). The Banks respond in two ways: first, the Banks argue that the TRIA and FSIA require that the terrorist party—Iran—have an “ownership interest” in the blocked funds in order for them to be subject to execution; second, for those accounts in which Iran does have an ownership interest, the Banks argue that they should be permitted to file an interpleader complaint to account for potential third-party interests in the blocked funds. The Court first reviews the regime of legal and regulatory provisions governing execution of FSIA judgments, and then turns to the parties' dispute.

II. BACKGROUNDA. Statutory and Regulatory Framework
1. Iran–Specific Regulations

Relations between the United States and Iran deteriorated following the 1979 revolution in which Iran's monarchy was displaced by an Islamic republic, ruled by the Ayatollahs, that remains in power today. Following the regime change and fueled by the Iran hostage crisis, President Carter—exercising the authority granted to him under the International Emergency Economic Powers Act, 50 U.S.C. § 1701 et seq.—blocked the flow of assets between the United States and Iran, and seized Iranian property located within the United States. Executive Order 12170, 44 Fed.Reg. 65,729 (Nov. 14, 1979). Over the next two years, Presidents Carter and Reagan issued numerous Executive Orders seizing additional assets, while the Office of Foreign Assets Control (“OFAC”)—a component of the Department of the Treasury that administers and enforces economic and trade sanctions—promulgated regulations concerning transactions between persons in the United States and Iran. In 1981, the United States and Iran reached an agreement, known as the Algiers Accords, which led to the release of the hostages and the unfreezing of most Iranian assets. Over the following decades, sanctions regimes instituted by Executive Orders and rules promulgated by OFAC evolved into the complex web of regulations governing Iranian assets in the United States, as well as transactions with Iran. 3

[885 F.Supp.2d 433]

Today, the basic framework for the treatment of Iranian property and trade with Iran is set forth in two complementary sets of provisions promulgated by OFAC that generally bar all transactions either with Iran or involving Iranian interests and then carve out limited exceptions to that embargo. The first, known as the Iranian Assets Control Regulations (“IACR”) and codified at 31 C.F.R. Part 535, was implemented in 1980 during the Iran Hostage Crisis, 45 Fed.Reg. 24,432 (Apr. 9, 1980), and “broadly prohibits unauthorized transactions involving property in which Iran has any interest,” while granting specific licenses for certain transactions. Flatow v. Islamic Republic of Iran, 305 F.3d 1249, 1255 (D.C.Cir.2002). The second, known as the Iranian Transactions Regulations (“ITR”) and codified at 31 C.F.R. Part 560, “confirms the broad reach of OFAC's Iranian sanctions programs by establishing controls on Iranian trade, investments, and services.... As under the IACR, there is a general prohibition under the ITR of unauthorized transactions, coupled with specific licenses permitting certain kinds of transactions.” Flatow, 305 F.3d at 1255;see also Weinstein v. Islamic Republic of Iran, 299 F.Supp.2d 63, 68 (E.D.N.Y.2004) (“The ITR prohibited, inter alia, the importation of goods and services from Iran, and the exportation, reexportation, and sale or supply of goods, technology or services to Iran.”).

B. Procedural History

After securing judgment against defendants and properly serving them with copies of that judgment as required under the FSIA, see Order, May 10, 2010, ECF No. 158, plaintiffs issued writs of attachment to garnishees Bank of America, N.A., and Wells Fargo, N.A., asking, inter alia, whether each company was indebted to defendants.

Bank of America answered its writ on July 19, 2011. Answer to Writ of Garnishment, ECF No. 191. Bank of America responded that it holds the proceeds of various Iranian-related transactions that it blocked pursuant to OFAC regulations. Specifically, Bank of America holds the following blocked asset accounts:

+---------------------------------------------------------------------+
                ¦Amount ¦Iranian Entity(ies) ¦Type of Blocked Account ¦
                +-------------+----------------------------+--------------------------¦
                ¦$34,453.88 ¦Iran Marine and Industrial ¦Deposit Account ¦
                +-------------+----------------------------+--------------------------¦
                ¦$11,717.00 ¦SedIran Drilling Company ¦Deposit Account ¦
                +-------------+----------------------------+--------------------------¦
                ¦$5,939.97 ¦Bank Sepah ¦EFT ¦
                +-------------+----------------------------+--------------------------¦
                ¦$ 9,721.85 ¦Iran Air & Melli Bank Plc UK¦Check Proceeds ¦
                +-------------+----------------------------+--------------------------¦
                ¦$38,469.57 ¦Bank Melli Iran ¦EFT ¦
                +---------------------------------------------------------------------+
                

Bank of America contests the turnover of only the two blocked Electronic Funds Transfer (“EFT”) accounts in its possession. These are the accounts involving Bank Sepah and Bank Melli Iran (bolded above). The remaining three accounts are uncontested and subject to the Banks' motion to file an interpleader complaint.

Wells Fargo answered its writ on September 8, 2011. Answer to Writ of Garnishment, ECF No. 201. Wells Fargo also responded that it holds the proceeds of various Iranian-related transactions that it blocked pursuant to OFAC regulations. Specifically, Wells Fargo holds the following blocked asset accounts:

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26 practice notes
  • Ministry Support for the Armed Forces of the Islamic Republic of Iran v. Cubic Def. Sys., Inc., Case No. 98–CV–1165–B (DHB).
    • United States
    • United States District Courts. 9th Circuit. United States District Court (Southern District of California)
    • November 27, 2013
    ...ordinarily respect State Department's interpretation of a treaty that it negotiated); Estate of Heiser v. Islamic Republic of Iran, 885 F.Supp.2d 429, 441 (D.D.C.2012) (giving weight to Statement [984 F.Supp.2d 1085]of Interest by Executive Branch on issue of foreign policy). Consequently, ......
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    • United States
    • United States Courts of Appeals. United States Court of Appeals (3rd Circuit)
    • July 29, 2019
    ...obstacle to [Sovereign Immunities Act] plaintiffs’ attempts to satisfy judgment." Estate of Heiser v. Islamic Republic of Iran , 885 F. Supp. 2d 429, 435 (D.D.C. 2012), aff’d 735 F.3d 934 (D.C. Cir. 2013). In addition to the initial information imbalance between the judgment creditor and th......
  • Bennett v. Islamic Republic of Iran, Nos. 13-15442
    • United States
    • United States Courts of Appeals. United States Court of Appeals (9th Circuit)
    • February 22, 2016
    ...the agency or instrumentality to satisfy the judgments against the foreign state. See Estate of Heiser v. Islamic Republic of Iran , 885 F. Supp. 2d 429, 442 (D.D.C. 2012) (“Section § 1610(g) subparagraphs (A)–(E) explicitly prohibit consideration of each of the five Bancec factors.”); aff'......
  • Bennett v. Islamic Republic of Iran, Nos. 13–15442
    • United States
    • United States Courts of Appeals. United States Court of Appeals (9th Circuit)
    • February 22, 2016
    ...of the agency or instrumentality to satisfy the judgments against the foreign state. See Estate of Heiser v. Islamic Republic of Iran, 885 F.Supp.2d 429, 442 (D.D.C.2012) ("Section § 1610(g) subparagraphs (A)-(E) explicitly prohibit consideration of each of the five Bancec factors."); aff'd......
  • Request a trial to view additional results
26 cases
  • Ministry Support for the Armed Forces of the Islamic Republic of Iran v. Cubic Def. Sys., Inc., Case No. 98–CV–1165–B (DHB).
    • United States
    • United States District Courts. 9th Circuit. United States District Court (Southern District of California)
    • November 27, 2013
    ...ordinarily respect State Department's interpretation of a treaty that it negotiated); Estate of Heiser v. Islamic Republic of Iran, 885 F.Supp.2d 429, 441 (D.D.C.2012) (giving weight to Statement [984 F.Supp.2d 1085]of Interest by Executive Branch on issue of foreign policy). Consequently, ......
  • Crystallex Int'l Corp. v. Bolivarian Republic De Venezuela (In re De Venezuela), Nos. 18-2797 & 18-3124
    • United States
    • United States Courts of Appeals. United States Court of Appeals (3rd Circuit)
    • July 29, 2019
    ...obstacle to [Sovereign Immunities Act] plaintiffs’ attempts to satisfy judgment." Estate of Heiser v. Islamic Republic of Iran , 885 F. Supp. 2d 429, 435 (D.D.C. 2012), aff’d 735 F.3d 934 (D.C. Cir. 2013). In addition to the initial information imbalance between the judgment creditor and th......
  • Bennett v. Islamic Republic of Iran, Nos. 13-15442
    • United States
    • United States Courts of Appeals. United States Court of Appeals (9th Circuit)
    • February 22, 2016
    ...the agency or instrumentality to satisfy the judgments against the foreign state. See Estate of Heiser v. Islamic Republic of Iran , 885 F. Supp. 2d 429, 442 (D.D.C. 2012) (“Section § 1610(g) subparagraphs (A)–(E) explicitly prohibit consideration of each of the five Bancec factors.”); aff'......
  • Bennett v. Islamic Republic of Iran, Nos. 13–15442
    • United States
    • United States Courts of Appeals. United States Court of Appeals (9th Circuit)
    • February 22, 2016
    ...of the agency or instrumentality to satisfy the judgments against the foreign state. See Estate of Heiser v. Islamic Republic of Iran, 885 F.Supp.2d 429, 442 (D.D.C.2012) ("Section § 1610(g) subparagraphs (A)-(E) explicitly prohibit consideration of each of the five Bancec factors."); aff'd......
  • Request a trial to view additional results

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