Villoldo v. Ruz, 13–mc–94014–TSH.
| Decision Date | 07 July 2015 |
| Docket Number | No. 13–mc–94014–TSH.,13–mc–94014–TSH. |
| Citation | 113 F.Supp.3d 435 |
| Parties | Alfredo VILLOLDO, individually, and Gustavo E. Villoldo, individually, and as Administrator, Executor, and Personal Representative of the Estate of Gustavo Villoldo Argilagos, Plaintiffs, 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, and the Republic of Cuba, a foreign state, Defendants. |
| Court | U.S. District Court — District of Massachusetts |
Andrew C. Hall, Roarke Maxwell, Brandon R. Levitt, Hall, Lamb and Hall P.A., Miami, FL, Louis M. Ciavarra, Aivi Nguyen, Bowditch & Dewey, LLP, Worcester, MA, for Plaintiffs.
MEMORANDUM AND ORDER ON PLAINTIFFS' MOTION TO COMPEL RE–ISSUANCE OF CERTIFICATED SHARES (Docket No. 37), and MOTION FOR ORDER TO COMPLETE TURNOVER AND SET BOND FOR RE–ISSUANCE OF CERTIFICATED SHARES (Docket No. 49)
Plaintiffs Alfredo Villoldo, Gustavo Villoldo, and the Estate of Gustavo Villoldo Argilagos ("Plaintiffs") seek the turnover of 383 securities accounts held by Trustee–Process Defendant Computershare, Inc. ("Computershare"). The accounts ("Computershare accounts") were opened in the 1950s by seventy individuals with Cuban addresses. Computershare, located in Canton, Massachusetts, is a transfer agent of U.S.-based securities issuers. Plaintiffs seek the turnover of the Computershare accounts in execution of a default judgment obtained by Plaintiffs in a Florida state court against Defendants Fidel Castro Ruz, Raul Castro Ruz, the Ministry of the Interior, the Army of the Republic of Cuba, and the Republic of Cuba. The judgment was awarded for the wrongful death and personal injuries of Gustavo Villoldo Argilagos, who was abducted, imprisoned, and tortured by the Castro regime following the Cuban Revolution. Plaintiffs are the sons and estate of Gustavo Villoldo Argilagos.
This Court granted Plaintiffs' initial ex parte motion for turnover on December 11, 2013. (Docket No. 27) ("Turnover Order"). The Court found that under Cuban Law Nos. 567 and 568, the Computershare accounts are owned by the Republic of Cuba, and are therefore subject to attachment and execution to satisfy Plaintiffs' judgment under the Terrorism Risk Insurance Act of 2002 and the Foreign Sovereign Immunities Act. The Court issued a trustee summons and Computershare filed an answer on December 31, 2013, in which it indicated that it would not oppose the turnover of the accounts within its possession. (Docket No. 30).
On April 2, 2014, however, Computershare had a change of heart and filed an emergency motion for a continuance of the turnover process, citing "the myriad of regulatory, contractual, and statutory securities issues" raised by the Turnover Order. (Docket No. 45). The Court granted the continuance, prompting Plaintiffs to file a motion for an order directing Computershare to complete the turnover process. (Docket No. 49). Subsequently, the United States filed a statement of interest urging the Court rescind the Turnover Order. (Docket No. 69). Specifically, the United States asked the Court to reconsider its conclusion that the accounts are owned by Cuba.1
In an order dated January 8, 2015, this Court determined that it would reconsider the Turnover Order and requested additional briefing from the parties on whether Cuban Law Nos. 567 and 568 vested ownership of the Computershare accounts in Cuba. (Docket No. 85). For the following reasons, the Turnover Order (Docket No. 27) and the Order Directing Turnover of Book Shares and Cash Accounts (Docket No. 35) are vacated. Plaintiffs' Motion to Compel Re–Issuance of Certificated Shares (Docket No. 37) and Motion for Order to Complete Turnover and Set Bond for Re–Issuance of Certificated Shares (Docket No. 49) are denied.
The Foreign Sovereign Immunities Act (FSIA) provides that "a foreign state will be 'immune from the jurisdiction of the courts of the United States and of the States.' " Hausler v. JP Morgan Chase Bank, N.A., 770 F.3d 207, 211 (2d Cir.2014) (citing 28 U.S.C. § 1604 (1988) ). However, Congress has created certain terrorism-related exceptions to the general immunity that foreign sovereigns enjoy in federal and state courts. One of those exceptions is § 201 of the Terrorism Risk Insurance Act (TRIA), which makes liable terrorist states for judgments obtained against them in U.S. courts. Section 201(a) provides:
Notwithstanding any other provision of law ..., in every case in which a person has obtained a judgment against a terrorist party on a claim based upon an act of terrorism, or for which a terrorist party is not immune under [28 U.S.C. § 1605A ] ..., the blocked assets of that terrorist party (including the blocked assets of any agency or instrumentality of that terrorist party) shall be subject to execution or attachment in aid of execution in order to satisfy such judgment to the extent of any compensatory damages for which such terrorist party has been adjudged liable.
Terrorism Risk Insurance Act of 2002, § 201(a), Pub.L. No. 107–297, 116 Stat. 2322, (codified at 28 U.S.C. § 1610 Note "Satisfaction of Judgments from Blocked Assets of Terrorists, Terrorist Organizations, and State Sponsors of Terrorism") (hereinafter "TRIA § 201(a)") (emphasis added).
The issue before this Court is whether the Computershare accounts are owned by the Republic of Cuba. If so, TRIA § 201(a) allows Plaintiffs to attach the accounts in satisfaction of their Florida state court judgment.2 Plaintiffs argue that the accounts, which are held in the names of seventy account holders believed to be Cuban nationals, are the property of Cuba. According to Plaintiffs, Cuban Law Nos. 567 and 568 made it illegal for Cuban nationals to hold investments in foreign companies and any such assets were automatically nationalized pursuant to those laws in the early to mid–1960s. Therefore, Plaintiffs claim that the Computershare accounts are owned by Cuba. Computershare and the United States raise three impediments to this theory of recovery. First, they argue that Cuban Law Nos. 567 and 568 cannot be given extraterritorial effect by this Court. Second, they contend that the penal law rule precludes application of the Cuban laws. Third, Computershare and the United States assert that, by their plain language, the Cuban laws did not nationalize the Computershare accounts.
Computershare and the United States first assert that the Cuban laws cannot be given extraterritorial effect. Courts in the United States are precluded "from inquiring into the validity of the public acts a recognized foreign sovereign power committed within its own territory." Hilton v. Kerry, 754 F.3d 79, 85 n. 4 (1st Cir.2014) (quoting Banco Nacional de Cuba v. Sabbatino, 376 U.S. 398, 401, 84 S.Ct. 923, 11 L.Ed.2d 804 (1964) ). This general rule, known as the act of state doctrine, arises from our government's system of separation of powers and the recognition that the executive branch bears primary responsibility for conducting foreign affairs. See Tchacosh Co., Ltd. v. Rockwell Intern. Corp., 766 F.2d 1333, 1336 (9th Cir.1985). Decrees by foreign governments purporting to confiscate property are "the very archetype of an act of state." Republic of Iraq v. First Nat'l City Bank, 353 F.2d 47, 50 (2d Cir.1965).
However, the act of state doctrine only forbids judicial examination of "taking[s] by a foreign sovereign of property within its own territory, " and does not bar inquiry into the expropriation of property located outside the foreign state.3 Id. at 51 (emphasis added); see also Banco Nacional de Cuba v. Chemical Bank New York Trust Co., 658 F.2d 903, 908 (2d Cir.1981). U.S. courts generally "will not give extra-territorial effect to a confiscatory decree of a foreign state, even where directed against its own nationals." Maltina Corp. v. Cawy Bottling Co., 462 F.2d 1021, 1025 (5th Cir.1972). This is true regardless of whether the foreign state attempts to expropriate property of individuals or a domestic corporation. See Republic of Iraq, 353 F.2d at 51. The prevailing rule is that when property is located in the United States at the time of the foreign state's attempted confiscation, U.S. courts will recognize the foreign decree only if it would be "consistent with the policy and law of the United States." Id. (quoting Restatement of Foreign Relations Law of the United States § 46 ); see also Chemical Bank, 658 F.2d at 908–09 (discussing United States v. Belmont, 301 U.S. 324, 57 S.Ct. 758, 81 L.Ed. 1134 (1937) ).
Plaintiffs contend that the extraterritorial effect rule does not apply because Cuban Law Nos. 567 and 568 caused assets of Cuban nationals to be "forfeited" to the Cuban government rather than "confiscated" or "expropriated." Plaintiffs cite no authority for this semantic distinction and the Court rejects it.4 The interpretation of the Cuban laws advanced by Plaintiffs would eliminate the rights of the Cuban nationals to the Computershare accounts and vest ownership in the Republic of Cuba. See Decl. of Jorge Salazar–Carrillo, Docket No. 95, Ex. A–1; Decl. of Jaime Suchlicki, Docket No. 95, Ex. B. Further, the parties do not dispute that the accounts are located in Massachusetts. Thus, "it is appropriate to treat [the Cuban laws] as ... foreign decree[s] purporting to expropriate property located within the United States." Maltina, 462 F.2d at 1027. The question for the Court, then, is whether it would be consistent with United States policy and law to recognize the validity of Cuban Law Nos. 567 and 568. Clearly, it would not.
Whether recognition of Cuban Law Nos. 567 & 568 is consistent with U.S. policy and law
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