In re Enforcement of Philippine Forfeiture Judgment Against All Assets of Arelma

• Decision Date: 27 February 2020
• Docket Number: 19-mc-412 (LAK)
• Citation: 442 F.Supp.3d 756
• Parties: IN RE: ENFORCEMENT OF PHILIPPINE FORFEITURE JUDGMENT Against All Assets of Arelma, S.A., Formerly Held at Merrill Lynch, Pierce, Fenner & Smith, Incorporated, Including, but Not Limited to, Account Number 16
• Court: U.S. District Court — Southern District of New York

442 F.Supp.3d 756

IN RE: ENFORCEMENT OF PHILIPPINE FORFEITURE JUDGMENT Against All Assets of Arelma, S.A., Formerly Held at Merrill Lynch, Pierce, Fenner & Smith, Incorporated, Including, but Not Limited to, Account Number 16

19-mc-412 (LAK)

United States District Court, S.D. New York.

Signed February 27, 2020

ORDER

Lewis A. Kaplan, District Judge.

Duran's motion for summary judgment [DI-37] is denied, and the United States's cross-motion for summary judgment [DI-46] is granted, substantially for the reasons set forth in the report and recommendation of Magistrate Judge Gorenstein. Duran's objections are overruled.

SO ORDERED.

REPORT AND RECOMMENDATION

GABRIEL W. GORENSTEIN, United States Magistrate Judge

The United States brought this action under 28 U.S.C. § 2467 on behalf of the Republic of the Philippines to enforce a Philippine forfeiture judgment against an asset held in the United States. Jose Duran, who purports to represent a class of judgment creditors, is a respondent. Both Duran and the Government have moved for summary judgment on the issue of whether this action is barred by the applicable statute of limitations, 28 U.S.C. § 2462.¹ For the reasons stated below, Duran's motion for summary judgment should be denied and the Government's cross-motion for summary judgment should be granted.

I. BACKGROUND

A. Factual Background

The assets that are the subject of this action belonged to an entity called Arelma S.A., as described in previous litigation regarding these assets. See Republic of Philippines v. Pimentel, 553 U.S. 851, 128 S.Ct. 2180, 171 L.Ed.2d 131 (2008) ; Swezey v. Merrill Lynch, Pierce, Fenner & Smith Inc., 19 N.Y.3d 543, 950 N.Y.S.2d 293, 973 N.E.2d 703 (2012). In brief, Ferdinand Marcos was the President of the Republic of the Philippines from 1965 to 1986. Swezey, 19 N.Y.3d at 546-47, 950 N.Y.S.2d 293, 973 N.E.2d 703. Marcos committed human rights violations and transferred public assets to his personal control — amassing a fortune worth billions of dollars. Id. at 547, 950 N.Y.S.2d 293, 973 N.E.2d 703. In 1972, Marcos arranged to incorporate Arelma, S.A. under Panamanian law and Arelma in turn opened a brokerage account with Merrill Lynch, Pierce, Fenner & Smith, Inc. in New York. Pimentel, 553 U.S. at 857, 128 S.Ct. 2180. Arelma deposited $2 million into the Merrill Lynch account, id., and the assets are now worth over $40 million, Registration and Enforcement of Foreign Forfeiture Judgment, filed June 27, 2016 (Docket # 1) ("Application") ¶ 1.

Marcos was forced out of office and fled the Philippines to Hawaii in 1986. See Swezey, 19 N.Y.3d at 547, 950 N.Y.S.2d 293, 973 N.E.2d 703. The Philippine Presidential Commission on Good Governance (the "PCCG") was then created to recover property he wrongfully acquired. Pimentel, 553 U.S. at 858, 128 S.Ct. 2180 ; see also Swezey, 19 N.Y.3d at 547, 950 N.Y.S.2d 293, 973 N.E.2d 703. Because Marcos had moved assets to Switzerland, the PCCG "almost immediately" sought help from the Swiss government in recovering and freezing assets that included shares in Arelma. Pimentel, 553 U.S. at 858, 128 S.Ct. 2180. In 1991, the PCCG asked the Sandiganbayan, a court in the Philippines with special jurisdiction over corruption cases, to "declare forfeited to the Republic any property Marcos has obtained through misuse of his office." Id.

Nearly two decades later, in April 2009, the Sandiganbayan entered a judgment forfeiting the Arelma account "in the estimated aggregate amount of US $3,369,975.00 as of 1983, plus all interests and all other income that accrued thereon, until the time or specific day that all money or monies are released and/or transferred to the possession of the Republic." Application, Exhibit 1 at *4-57.² That judgment was appealed and on April 25, 2012, the Philippine Supreme Court affirmed the judgment. Id. at *61-94. It denied a motion for reconsideration on March 12, 2014. Id. at *98-103. On March 31, 2014, the Philippine Supreme Court Clerk entered judgment stating the forfeiture judgment was "final and executory and ... recorded in the Book of Entries of Judgments." Id. at *105-106.

B. Procedural History

In January 2015, the Philippines submitted a request for the United States to enforce the Sandiganbayan forfeiture judgment. See Application, Exhibit 4 (Affidavit of Leila M. De Lima); see also Reply, Exhibit 4 ¶ 3. The request outlined the Sandiganbayan decision and indicated that the Marcos estate and heirs were notified of the proceedings, and that some challenged the Sandiganbayan decision on appeal. Id. ¶ 4. It further stated:

The Supreme Court has issued an Entry of Judgment, pursuant to which the Sandiganbayan has issued a Writ of Execution. These issuances are not subject to further review or appeal.

Id. ¶ 5.

Per the procedure stated in 28 U.S.C. § 2467(b), the request was certified by the Assistant Attorney General for the Criminal Division on February 11, 2016. See Application, Exhibit 1 at *2. The United States in turn filed the instant case as an "Application to Register and Enforce a Foreign Forfeiture Judgment Pursuant to 28 U.S.C. § 2467" in the United States District Court for the District of Columbia on June 27, 2016.

II. GOVERNING LAW

A. Standard for Summary Judgment

Rule 56(a) of the Federal Rules of Civil Procedure states that summary judgment shall be granted when "the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law." Fed. R. Civ. P. 56(a) ; see also Beard v. Banks, 548 U.S. 521, 529, 126 S.Ct. 2572, 165 L.Ed.2d 697 (2006) (quoting Celotex Corp. v. Catrett, 477 U.S. 317, 323, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986) ); Celotex, 477 U.S. at 322, 106 S.Ct. 2548 (quoting Fed. R. Civ. P. 56(c) ). A genuine issue of material fact exists "if the evidence is such that a reasonable jury could return a verdict for the nonmoving party." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). "[O]nly admissible evidence need be considered by the trial court in ruling on a motion for summary judgment." Raskin v. Wyatt Co., 125 F.3d 55, 66 (2d Cir. 1997) (citations omitted); see also Fed. R. Civ. P. 56(c)(4) (parties shall "set out facts that would be admissible in evidence"). In this case, there are no disputes about material facts.

B. Enforcement of a Foreign Judgment

The Government filed its application to enforce the Philippines' forfeiture judgment pursuant to 28 U.S.C. § 2467, a statute entitled "Enforcement of a foreign judgment." To have a forfeiture judgment registered and enforced by an United States district court under section 2467, a foreign nation must first submit a request to the Attorney General that includes

(A) a summary of the facts of the case and a description of the proceedings that resulted in the forfeiture or confiscation judgment;

(B) [a] certified copy of the forfeiture or confiscation judgment;

(C) an affidavit or sworn declaration establishing that the foreign nation took steps, in accordance with the principles of due process, to give notice of the proceedings to all persons with an interest in the property in sufficient time to enable such persons to defend against the charges and that the judgment rendered is in force and is not subject to appeal; and

(D) such additional information and evidence as may be required by the Attorney General or the designee of the Attorney General.

28 U.S.C. § 2467(b)(1).³ If, "in the interest of justice," the Attorney General certifies the request, "such decision shall be final and not subject to either judicial review or review under ... the Administrative Procedure Act." Id. § 2467(b)(2) (internal quotation marks and parentheses omitted).

Once the request is certified by the Attorney General, the Government "may file an application on behalf of a foreign nation in district court of the United States seeking to enforce the foreign forfeiture or confiscation judgment as if the judgment had been entered by a court in the United States." Id. § 2467(c)(1). The Government becomes "the applicant and the defendant or another person or entity affected by the forfeiture or confiscation judgment shall be the respondent." Id. § 2467(c)(2)(A). Section 2467 defines "forfeiture or confiscation judgment" as

a final order of a foreign nation compelling a person or entity —

(A) to pay a sum of money representing ... any violation of foreign law that would constitute a violation or an offense for which property could be forfeited under Federal law if the offense were committed in the United States, or any foreign offense described in section 1956(c)(7)(B) of title 18, or property the value of which corresponds to such proceeds; or

(B) to forfeit property involved in or traceable to the commission of such offense.

28 U.S.C. § 2467(a)(2).

Once an application is made,

The district court shall enter such orders as may be necessary to enforce the judgment on behalf of the foreign nation unless the court finds that —

(A) the judgment was rendered under a system that provides tribunals or procedures incompatible with the requirements of due process of law;

(B) the foreign court lacked personal jurisdiction over the defendant;

(C) the foreign court lacked jurisdiction over the subject matter;

(D) the foreign nation did not take steps, in accordance with the principles of due process, to give notice of the proceedings to a person with an interest in the property in sufficient time to enable him or her to defend; or

(E) the judgment was obtained by fraud.

Id. § 2467(d)(1) (apparent typographical error corrected).

C. Statute of Limitations

The parties agree that 28 U.S.C. § 2462 is the statute of limitations applicable to section 2467. That statute provides:

[A]n action, suit or proceeding for the enforcement of any civil fine, penalty, or forfeiture, pecuniary or otherwise, shall not be entertained unless commenced within five years from the date when the claim first accrued if, within the same

...