Villoldo v. Castro Ruz

• Decision Date: 12 May 2016
• Docket Number: No. 15–2080,No. 15–1808,15–1808,15–2080
• Parties: Alfredo VILLOLDO, individually; Gustavo E. Villoldo, individually, and as Administrator, Executor and Personal Representative of the Estate of Gustavo Villoldo Argilagos, Plaintiffs–Appellants/Cross–Appellees, v. Fidel CASTRO RUZ, as an individual, and as an official, employee, or agent of The Republic of Cuba; Raul Castro Ruz, as an individual, and as an official, employee, or agent of The Republic of Cuba; The Ministry of Interior, an agency or instrumentality of The Republic of Cuba; The Army of the Republic of Cuba, an agency or instrumentality of The Republic of Cuba; The Republic of Cuba, a foreign state, Defendants–Appellees, Computershare, Inc., Trustee–Appellee/Cross–Appellant.
• Court: U.S. Court of Appeals — First Circuit

821 F.3d 196

Alfredo VILLOLDO, individually; Gustavo E. Villoldo, individually, and as Administrator, Executor and Personal Representative of the Estate of Gustavo Villoldo Argilagos, Plaintiffs–Appellants/Cross–Appellees

v.Fidel CASTRO RUZ, as an individual, and as an official, employee, or agent of The Republic of Cuba; Raul Castro Ruz, as an individual, and as an official, employee, or agent of The Republic of Cuba; The Ministry of Interior, an agency or instrumentality of The Republic of Cuba; The Army of the Republic of Cuba, an agency or instrumentality of The Republic of Cuba; The Republic of Cuba, a foreign state, Defendants–Appellees

Computershare, Inc., Trustee–Appellee/Cross–Appellant.

No. 15–1808

No. 15–2080

United States Court of Appeals, First Circuit.

May 12, 2016.

Andrew C. Hall, with whom Hall, Lamb and Hall, P.A. was on brief, for Plaintiffs–Appellants/Cross–Appellees.

Michael C. Gilleran, with whom Burns & Levinson, LLP was on brief, for Trustee–Appellee/Cross–Appellant.

Benjamin M. Shultz, Attorney, Appellate Staff Civil Division, United States Department of Justice, with whom Benjamin C. Mizer, Principal Deputy Assistant Attorney General, Carmen M. Ortiz, United States Attorney, Sharon Swingle, Appellate Staff, Civil Division, United States Department of Justice, Lisa J. Grosh, Assistant Legal Advisor, Department of State, of counsel, were on brief, for The United States of America, amicus curiae.

Before THOMPSON, Circuit Judge, SOUTER, Associate Justice,^* and BARRON, Circuit Judge.

BARRON

, Circuit Judge.

These cross-appeals arise from the ongoing efforts by two brothers to satisfy a multi-billion dollar judgment they won against the Republic of Cuba and other Cuban parties. In the appeal that the brothers bring, they challenge the District Court's ruling that certain assets they seek to attach to satisfy that judgment are not the property of the Cuban government and thus are not subject to attachment in satisfaction of their judgment. The cross-appeal is brought by the trustee who controls the assets in question. The trustee challenges the District Court's denial of its motion for attorneys' fees incurred in proceedings concerning whether it had to turn over the assets in question to the brothers. We affirm the District Court in both appeals.

I.

The primary legal dispute in this case concerns how the law of foreign relations affects the attempted satisfaction of a judgment. The judgment itself, however, is not at issue. Nevertheless, because the circuitous route that led from that judgment to these cross-appeals is relevant to the issues in dispute, we begin by briefly retracing how we got from there to here.

The brothers who are seeking to satisfy the judgment are Alfredo and Gustavo Villoldo, each of whom moved from Cuba to the United States in 1960. In 2008, they filed suit in Florida state court and named as defendants: Fidel Castro Ruz; Raul Castro Ruz; the Republic of Cuba; the Cuban Ministry of the Interior; and the Army of the Republic of Cuba (together, the “Cuban defendants”).

The brothers' complaint alleged state-law causes of action for economic loss, intentional infliction of emotional distress, and wrongful death. The complaint alleged that after Fidel Castro assumed power, on January 1, 1959, his government began to target the Villoldos. In particular, the complaint alleged that the targeting involved the following actions. Cuban security forces threatened, beat, and arrested both brothers. Cuban officials threatened Gustavo Villoldo Argilagos, the brothers' father, and promised to kill the entire family unless the brothers' father committed suicide and turned his property over to the Cuban government. The Cuban government confiscated Gustavo Villoldo Argilagos's land, company, and bank accounts after he was found dead on February 16, 1959, apparently having committed suicide. And the Cuban government continued to threaten the brothers with assassination even after they fled Cuba for the United States in 1960.

In 2011, a Florida court awarded the brothers a $2.79 billion judgment against the Cuban defendants on their state-law claims. The judgment followed the defendants' default and a bench trial on damages.

Soon thereafter, the brothers sued the Cuban defendants in the Southern District of New York, seeking recognition of the Florida judgment under the Full Faith and Credit Clause of the United States Constitution. U.S. Const. art. IV, § 1

. The Cuban defendants defaulted again, and the Southern District of New York awarded the brothers a federal judgement in the amount of $2.79 billion, plus interest.

The brothers then sought to execute the federal judgment, including by pursuing assets located in Massachusetts and allegedly owned by the Cuban government. So, as part of that quest, on May 17, 2013, the brothers registered the New York federal judgment in the District of Massachusetts. And on June 6, 2013, the District Court authorized the brothers to seek attachment. The brothers then served a subpoena on Computershare, Inc., a transfer agent located in Canton, Massachusetts.

The subpoena sought information about any securities accounts controlled by Computershare that were blocked pursuant to the Cuban Assets Control Regulations, 31 C.F.R. Subt. B, ch. V, pt. 515, the Cuba sanctions regime. The brothers hoped to identify accounts that Cuba owns. Computershare produced a chart identifying 383 accounts that had been blocked by the Cuban sanctions regime, which had been opened by 70 different individuals.

Having received that information, the brothers, in December of 2013, filed an ex parte motion in the District Court for a turnover order against Computershare. The brothers' motion argued that the accounts identified by Computershare had been opened in the 1950s by Cuban nationals, but had since become the property of Cuba by operation of a Cuban confiscatory law. Thus, the brothers argued that the accounts are subject to attachment in light of the federal judgment from New York. The brothers requested that the District Court (a) find the accounts subject to attachment and execution; (b) allow the issuance of a trustee summons to Computershare; and (c) establish a procedure to notify potential parties in interest.

The District Court granted the motion, established a detailed notice protocol, and set January 31, 2014, as the deadline for any interested party to file an objection. The District Court also ordered Computershare to turn over the accounts of any non-objecting parties by February 7, 2014.

Following the District Court's ruling, the brothers served Computershare with a trustee summons. Computershare filed a trustee answer shortly afterwards. Computershare contended that the accounts at issue contained three different types of assets: shares of common stock held by physical stock certificates (“certificated shares”); shares of common stock held electronically (“book shares”); and cash. Computershare asserted that it could turn over the cash and the book shares but that it could hand over the certificated shares only if the brothers provided a surety bond and the Court made a finding that the original shares were deemed “lost, stolen or wrongfully taken.”

Following the passing of the January 31, 2014 objection deadline—by which time only one objection had been filed—the District Court, on February 12, 2014, issued a follow-on turnover order. This order required Computershare to turn over the book and cash assets within 60 days. The order did not address the certificated shares. The order also stated that the District Court would set a briefing schedule for the objecting party.

Another flurry of motions followed the February 12 order. As relevant here, Computershare at this point argued for the first time—in its briefing regarding whether it should be given extra time to comply with the February 12 order—that the blocked accounts should not be considered the property of Cuba. The United States then filed a statement of interest that also argued that the accounts should not be considered the property of Cuba. The brothers responded that the February 12 turnover order was a final judgment and thus that the District Court lacked the authority to revisit it.

The District Court, however, determined that the February 12 order was not a final judgment. Then, on July 7, 2015, the District Court ruled that—contrary to the conclusion it had reached in its original turnover order—the blocked assets were not the property of the Cuban government, denied the brothers' pending motions, and dismissed the case.

That day, the District Court entered both its memorandum and order as well as a document entitled “Order of Dismissal,” which read: “In accordance with the Court's Memorandum and Order dated 7/7/15, it is hereby ORDERED that the above-entitled action be and hereby is dismissed.” Three days later, the brothers appealed from the dismissal.

On July 31, 2015—24 days after the dismissal—Computershare filed a motion seeking attorneys' fees. Computershare argued that the motion was timely because the July 7 “Order of Dismissal” did not satisfy the separate document requirement set forth in Federal Rule of Civil Procedure 58

and so had not started Federal Rule of Civil Procedure 54's 14–day clock for moving for attorneys' fees.

The District Court denied Computershare's motion. The District Court ruled that the July 7 order was a final judgment that satisfied Rule 58

's separate document rule and that “Computershare ha[d] not shown good cause or excusable neglect for failing to make a fee request within the required period.” Computershare cross-appeals from that denial.

II.

The threshold issue is whether the District Court had the authority to revisit its initial determination that Cuba owned the assets subject to the February 12 turnover order. The parties agree that the District Court did have such authority if the February 12 order was not a final judgment. And so the dispute turns on whether it was. We...