Tran Qui Than v. Blumenthal, C-77-1361-WWS.

• Decision Date: 27 April 1979
• Docket Number: No. C-77-1361-WWS.,C-77-1361-WWS.
• Citation: 469 F. Supp. 1202
• Court: U.S. District Court — Northern District of California
• Parties: TRAN QUI THAN, Plaintiff, v. W. Michael BLUMENTHAL, Defendant.

469 F. Supp. 1202

TRAN QUI THAN, Plaintiff, v. W. Michael BLUMENTHAL, Defendant.

No. C-77-1361-WWS.

United States District Court, N. D. California.

April 27, 1979.

COPYRIGHT MATERIAL OMITTED

Mattaniah Eytan, Kirkwood, Kaplan, Russin & Vecchi, San Francisco, Cal., for plaintiff.

Dennis L. deLeon, U. S. Dept. of Justice, Washington, D. C., John D. O'Connor, Asst. U. S. Atty., San Francisco, Cal., for defendant.

MEMORANDUM AND ORDER GRANTING DEFENDANT'S MOTION FOR SUMMARY JUDGMENT

WILLIAM W SCHWARZER, District Judge.

Section 500.201 of the Foreign Assets Control Regulations ("Regulations"), 31 C.F.R. Part 500, prohibits, except upon specific authorization by the Secretary of the Treasury, transactions involving United States based property in which a designated foreign country or a national thereof has an interest. South Vietnam is a designated foreign country. Plaintiff, a shareholder in a South Vietnam bank, the Dong Phuong Bank ("Bank"), claims an interest in funds owed by the United States Government to the Bank. The Secretary of the Treasury has ruled that the Bank is a "designated national" and that the funds are therefore blocked pursuant to the Regulations, and has refused to issue an unblocking license. The parties' cross-motions for summary judgment raise two issues. First, did the Secretary err in determining that the Bank is a designated national and therefore subject to the Regulations' blocking provisions? Second, did the Secretary err in not issuing a license unblocking the funds owed to the Bank?

I. Statement of Facts

The Dong Phuong Bank was a private commercial bank established in 1968 under the laws of the Republic of Vietnam. As of April 30, 1975, when South Vietnam fell to the communist forces, a small group of shareholders owned the Bank's stock. All the shareholders were nationals and residents of Vietnam. The Bank's 11 directors owned more than 80 percent of the outstanding shares. Plaintiff was the principal shareholder, owning 13 percent of the outstanding shares, and served as a director and as president of the Bank.

Plaintiff fled Vietnam on April 25, 1975, and currently resides in Berkeley, California. He entered the United States as a refugee with parole status granted by the Attorney General under Section 1182(d)(5) of the Immigration and Nationality Act, 8 U.S.C. § 1182(d)(5). Of the eleven shareholder-directors, seven left Vietnam in anticipation of the communist takeover, one remained in Vietnam, one was captured and imprisoned while attempting to leave Vietnam, and the fate of the remaining two shareholder-directors is unknown. The three shareholder-directors known to be residing in the United States (plaintiff and two others) account for 18 percent of the Bank's stock; those in France and Hong Kong hold 38 percent; those known to be in Vietnam hold 30 percent; and those whose location is unknown hold 14 percent.

On April 15, 1975, the shareholder-directors met to consider what action they should take in light of the impending fall of Vietnam. They adopted a resolution providing that those members of the management board "who will be able to leave the country will be qualified to manage and to make use of all the . . . properties that the Bank possesses abroad." This resolution was to be "enforced beginning the day when . . . Saigon . . . will be occupied by the Communist government."

Saigon fell and resistance ended on April 30, 1975. On May 1, the Provisional Revolutionary Government of Vietnam ("P.R. G.") issued a communique directing that "banks . . . will be confiscated and from now on, managed by the revolutionary administration." Plaintiff maintains that the Bank was confiscated and destroyed on April 30, and that the communique confirmed this fact. Defendant argues that the Bank continued to function until August 1975. It is undisputed, however, that the Bank, in whatever form it may currently exist, and its assets are now controlled by the P.R.G.

As of April 30, 1975, the Bank was the assignee of monies owed to certain Vietnamese contractors under several construction, maintenance, and supply contracts with the United States Army and Navy. The assignments were made in consideration of the issuance of performance bonds, running to the benefit of the United States, guaranteeing performance by the Vietnamese contractors, and in consideration of the loan of working capital to the Vietnamese contractors. The contractors had entirely performed their contracts before the fall of Vietnam; however, on that date, the United States still owed a residual sum to each contractor. The contractors have since come to the United States as parolee-refugees.

At an unspecified time after arriving in the United States, plaintiff sought payment from the Army of the $221,235 which it owed under the contract. The Army refused to make this payment, stating that the money was blocked pursuant to Section 500.201 of the Regulations, and that to receive the funds it was necessary to obtain a license from the Secretary of the Treasury. At another unspecified time, plaintiff signed a release on behalf of the Bank of the Bank's claims as assignee of the sum due from the Navy. The Navy then paid $49,965 to Tran Ngoc Tuan, one of the Vietnamese contractors now residing in the United States, which represented the total amount due under the contracts with the Navy. He in turn paid $29,975.44 to plaintiff.

On December 22, 1976, plaintiff applied to the Treasury Department's Office of Foreign Assets Control for a license to unblock the sum owed to the Bank by the Army. On February 22, 1977, the Office of Foreign Assets Control, acting on behalf of the Secretary of the Treasury, denied plaintiff's application, giving the following reasons:

The Dong Phuong Bank, a Vietnamese corporation, is a designated national under the Regulations. The Regulations prohibit, in the absence of a Treasury license, all transactions involving assets in the United States in which a Vietnamese national has, or has had on or since April 30, 1975, any interest whatsoever. On April 30, 1975, the Bank had an interest in the funds due under all contracts which had been assigned to it. This interest could not be transferred after April 30, 1975, without a license from this Office.

The letter of denial also stated that the sums already paid by the Navy were blocked under Section 500.201 and contained subpoenas requesting information about these payments.

Plaintiff filed the instant action on June 23, 1977. As amended, the complaint seeks a declaration that the Foreign Assets Control Regulations are inapplicable in this case, there being no "designated national" having an interest in the funds, and that the funds due from the Navy and the Army thus may not properly be blocked. Alternatively, if the Court finds that there is a designated national with an interest in the funds, the complaint seeks declaratory relief requiring defendant to issue a license unblocking the funds. Plaintiff has been authorized by the shareholder-directors known to have left Vietnam to assert their interests as well in this action.

II. Capacity to Sue

Defendant has challenged plaintiff's capacity to sue on the ground that Tran is not the real party in interest. Fed.R.Civ.P. 17(a) states that "every action shall be prosecuted in the name of the real party in interest." But Rule 17(a) also states:

No action shall be dismissed on the ground that it is not prosecuted in the name of the real party in interest until a reasonable time has been allowed after objection for ratification of commencement of the action by, or joinder or substitution of, the real party in interest; and such ratification, joinder, or substitution shall have the same effect as if the action had been commenced in the name of the real party in interest.

Plaintiff has brought this action, on behalf of himself and other shareholders, as a shareholder of a Vietnam bank, the present legal status of which is unsettled. Plaintiff asserts that as a result of certain events, he now has an interest in funds owed to the Bank by the United States Government. Plaintiff's claims thus make him a real party in interest. Moreover, neither ratification by the Bank nor its substitution or joinder as plaintiff is feasible. Defendant will suffer no prejudice for there is no reason why he cannot assert against plaintiff any defenses which he could have asserted against the Bank; plaintiff can claim a share only of assets to which the Bank had a rightful claim. Defendant's motion to dismiss for lack of capacity must therefore be denied.

III. Scope of Review

Judicial review of the action of the Secretary of the Treasury, acting through the Office of Foreign Assets Control, is authorized by the Administrative Procedure Act ("APA"), 5 U.S.C. §§ 701 et seq. Section 706 defines the scope of review in this Court:

To the extent necessary to decision and when presented, the reviewing court shall decide all relevant questions of law, interpret constitutional and statutory provisions, and determine the meaning or applicability of the terms of an agency action. The reviewing court shall —

(1) * * *

(2) hold unlawful and set aside agency action, findings, and conclusions found to be —

(A) arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law;

(B) contrary to constitutional right, power, privilege, or immunity;

(C) in excess of statutory jurisdiction, authority, or limitations, or short of statutory right.

These standards apply except when an adjudicatory hearing is required, in which case the administrative record is reviewed under a "substantial evidence" standard. (§ 706(2)(E)). In the present case, no act or regulation requires an adjudicatory hearing. Section 500.801(b)(3) of the Regulations states that an applicant for a special license may arrange to make an "oral presentation" or elect to "argue the application." Plaintiff did not request an oral presentation or...