Rubin v. The Islamic Republic of Iran, CIV.A.06 11053 GAO.

• Decision Date: 30 September 2006
• Docket Number: No. CIV.A.06 11053 GAO.,CIV.A.06 11053 GAO.
• Citation: 456 F.Supp.2d 228
• Parties: Jenny RUBIN, et al., Plaintiffs-Judgment Creditors v. THE ISLAMIC REPUBLIC OF IRAN, et al., Defendants-Judgment Debtors, v. Museum of Fine Arts and Harvard University, et al., Trustee Process Defendants.
• Court: U.S. District Court — District of Massachusetts

456 F.Supp.2d 228

Jenny RUBIN, et al., Plaintiffs-Judgment Creditors v. THE ISLAMIC REPUBLIC OF IRAN, et al., Defendants-Judgment Debtors, v. Museum of Fine Arts and Harvard University, et al., Trustee Process Defendants.

No. CIV.A.06 11053 GAO.

United States District Court, D. Massachusetts.

September 30, 2006.

David J. Strachman, McIntyre, Tate, Lynch & Holt, Providence, RI, Richard J.

Grahn, Edward V. Colbert, III, Georgia J. Asimakopoulos, Looney & Grossman LLP, Boston, MA, for Plaintiffs-Judgment Creditors.

Mark C. Fleming, Timothy R. Shannon, Wilmer Cutler Pickering Hale and Dorr LLP, Robert J. Muldoon, Jr., Courtney Amber Clark, Sherin & Lodgen LLP, Boston, MA, Paul R.Q. Wolfson, Wilmer, Cutler, Pickering, Hale and Dorr LLP, Jason M. Knott, Joshua A. Doan, William D. Iverson, Covington & Burling LLP, Washington, DC, for Trustee Process Defendants.

MEMORANDUM AND ORDER

O'TOOLE, District Judge.

I. Introduction

The plaintiffs herein are the survivors of a terrorist attack orchestrated by Hamas. In an attempt to recover damages for the harm they suffered, they sued various defendants, including the Islamic Republic of Iran ("Iran") in a sister District Court. The complaint alleged that Iran was liable for the attack because it had provided material support to Hamas. Iran did not appear in the proceedings, and the court entered a default against it. Approximately six months later, the court entered final judgment in favor of the plaintiffs, awarding them a collective total of $71.5 million in compensatory damages and an additional $37.5 million each in punitive damages.

The plaintiffs thereafter registered their judgment with this Court and moved for an Order of Attachment by Trustee Process (Dkt. No. 2) against the Museum of Fine Arts, Harvard University and several of its museums (the "trustee process defendants"). The plaintiffs alleged, "upon information and belief," that the trustee process defendants possess property belonging to Iran that is available to be taken by them in partial satisfaction of the judgment. This Court issued trustee process summonses in April 2005 which were served upon the trustee process defendants.

The trustee process defendants moved to quash the summonses and to dissolve the trustee process attachments (Dkt.Nos.15, 38), asserting that they do not hold any antiquities that are the property of Iran. Furthermore, they asserted that even if they did hold any such property, it would be immune from attachment under the Foreign Sovereign Immunities Act, ("FSIA" or "the Act"), 28 U.S.C. §§ 1609, 1610. Rather than responding directly to the motions to quash,¹ the plaintiffs filed a motion for partial summary judgment (Dkt. No. 31), arguing that the trustee process defendants did not have standing to assert the immunity of Iran's property from attachment under 28 U.S.C. § 1609. Concurrently with their motion for partial summary judgment, the plaintiffs filed a motion to stay the trustee process defendants' motions to quash (Dkt. Nos. 28 & 40), arguing that it would be moot if the plaintiffs were to prevail on summary judgment. The trustee process defendants opposed the plaintiffs' motion for partial summary judgment, contending that the immunity of the property from attachment under 28 U.S.C. § 1609 was an issue that could be raised properly by them or even by the Court sua sponte.

II. Analysis

This Court acquired jurisdiction over the present controversy when the plaintiffs registered here the judgment they had obtained against Iran in the United States District Court for the District of Columbia, Civil Action No. 01-1655-RMU. See 28 U.S.C. § 1963; see also U.S.I. Properties Corp. v. M.D. Constr. Co., 230 F.3d 489, 496-98 (1st Cir.2000) (discussing ancillary enforcement jurisdiction and stating, "[w]here a postjudgment proceeding presents an attempt simply to collect a judgment duly rendered by a federal court, even if chasing after the assets of the judgment debtor now in the hands of a third party, the residual jurisdiction stemming from the court's authority to render that judgment is sufficient to provide for federal jurisdiction over the postjudgment claim.").

The plaintiffs seek to satisfy their judgment against Iran by attaching antiquities in the possession of the trustee process defendants pursuant to Fed.R.Civ.P. 69. Rule 69 provides that supplemental proceedings in aid of a judgment "shall be in accordance with the practice and procedure of the state in which the district court is held, . . . except that any statute of the United States governs to the extent that it is applicable." Fed.R.Civ.P. 69(a). The Foreign Sovereign Immunities Act, codified at 28 U.S.C. § 1602 et seq., is just such a statute. Like a number of the statutes referenced in the lengthy, non-exhaustive list contained in the Advisory Committee Notes to Fed.R.Civ.P. 69,² FSIA "governs" attachment and execution proceedings by exempting or immunizing certain types of property. See 28 U.S.C. § 1609. Specifically, § 1609 provides that "the property in the United States of a foreign state shall be immune from attachment arrest and execution except as provided in sections 1610 and 1611 of this chapter."

Rule 69 therefore requires that the Court consider a particular property's immunity status under FSIA (and similar statutes) prior to allowing a judgment creditor to execute against it. This inquiry may be undertaken by the Court, sua sponte, or the issue may be raised by any of the parties to the dispute.³ Neither of the sources of authority Rule 69 invokes — state law or "govern[ing]" federal statutes — appear to prevent such an approach. Under Massachusetts law, there is no procedural bar to third party trustees directing the court's attention to reasons why property in their possession is immune or exempt from execution. See, e.g., Toomey v. Toomey, No. 1085, 1997 WL 672062, at *1-2 (Mass.App.Div. Oct.24, 1997) (on appeal of trustee's motion for dissolution of attachment, court holds that attachment preempted by ERISA); see also Mass. Prac. Series § 5:82 (3d ed.) (citing Toomey for the proposition that "A party may move for the dissolution of an attachment by trustee process on the ground that the property attached was exempt from attachment."). Cf. Mass. Gen. Laws ch. 223, § 42 (authorizing attachment of "[al real and personal property liable to be taken on execution, except such personal property as, from its nature or situation, has been considered as exempt according to the principles of the common law as adopted and practiced in the commonwealth, or which is specifically exempt from execution [pursuant to specified statutes]," and not specifying (or limiting) which parties may raise the exemption issue). Likewise, there is no suggestion in the plain language of § 1609 that raising the question of a property's immunity from execution is a right reserved to the foreign sovereign itself. See 28 U.S.C. § 1609; see also Walker Int'l Holdings Ltd. v. Republic of Congo, 395 F.3d 229, 233 (5th Cir.2004) (stating the court had been unable to find any authority for the proposition that "it is the sovereign's exclusive right to raise the issue of sovereign immunity under FSIA") (emphasis in original), cert. denied, 544 U.S. 975, 125 S.Ct. 1841, 161 L.Ed.2d 726 (2005).⁴

Having concluded that it is appropriate for the Court, of its own accord or at the behest of the trustee process defendants, to determine whether the property in dispute is immune from execution, I begin my analysis with a review of the relevant provisions of FSIA. The Foreign Sovereign Immunities Act defines the parameters of a foreign state's immunity in the courts of the United States. Sections 1604 and 1605 establish a foreign state's jurisdictional immunity and exceptions to that immunity. Two other sections, 28 U.S.C. §§ 1609 and 1610, address the immunity from attachment granted to a foreign state's property and enumerate exceptions to that immunity. Specifically, § 1609 provides that "the property in the United States of a foreign state shall be immune from attachment arrest and execution except as provided in sections 1610 and 1611 of this chapter." 28 U.S.C. § 1609.

The property within the possession of the trustee process defendants is thus immune from execution and attachment unless one of the exceptions in §§ 1610 and 1611 applies: See DeLetelier v. Republic of Chile, 748 F.2d 790, 793 (2d Cir.1984). Only one of those exceptions — that which is set forth in § 1610(a)(7) — is potentially relevant in this case. Section 1610(a)(7) provides:

The property in the United States of a foreign state ... used for a commercial activity in the United States, shall not be immune from attachment in aid of execution, or from execution, upon a judgment entered by a court of the United States . . . if

. . . . .

the judgment relates to a claim for which the foreign state is not immune under section 1605(a)(7), regardless of whether the property is or was involved with the act upon which the claim is based.

28 U.S.C. § 1610(a)(7) (emphasis added).

The parties dispute the scope of this "commercial use" exception. The plaintiffs contend that it encompasses the commercial use of the property by any party, not just the foreign sovereign.⁵ In contrast, the trustee process defendants argue that the exception applies only where the foreign sovereign itself has made commercial use of the property within the United States. This is the better view. First and foremost, the plain language of FSIA, read in its entirety, warrants such a conclusion. Even if the Court were inclined (which it is not) to find § 1610's statement that "[t]he property in the United States of a foreign state . . . used for a commercial activity in the United States, shall not be immune . . . from execution" ambiguous on the question, that ambiguity would be resolved easily by reference to § 1602, which sets forth Congress' findings and declaration of purpose for the Act....