Volloldo v. Ruz

Decision Date07 January 2016
Docket Number1:14-mc-0025 (LEK/CFH)
PartiesALFREDO VOLLOLDO and GUSTAVO F. VILLOLDO, Plaintiffs, v. FIDEL CASTRO RUZ, et al., Defendants.
CourtU.S. District Court — Northern District of New York
MEMORANDUM-DECISION and ORDER
I. INTRODUCTION

In the present action, Plaintiffs Alfredo Volloldo and Gustavo F. Villoldo ("Plaintiffs") seek to enforce a default judgment against the Republic of Cuba ("Cuba") and various Cuban entities and officials (collectively, "Defendants"). Dkt. No. 6 ("1610(c) Motion") at 2. Plaintiffs brought suit against Defendants in the Eleventh Judicial Circuit in and for Miami-Dade County, asserting acts of torture under the Foreign Sovereign Immunities Act's ("FSIA") terrorism exception, 28 U.S.C. § 1605A. Id. On August 19, 2011, the Florida state court entered a default judgment in favor of Plaintiffs in the amount of $2.79 billion. Id. On October 25, 2012, the Southern District of New York extended full faith and credit to the Florida judgment, and on May 15, 2014, Plaintiffs commenced the present action by registering the Southern District of New York judgment in the Northern District. Id. at 2-3; Dkt. No. 1.1

Presently before the Court are three Petitions filed by Plaintiffs seeking an order directing Thomas P. DiNapoli, New York State Comptroller (the "Comptroller"), to turn over assets located in the Northern District that are blocked pursuant to the Cuban Asset Control Regulations ("CACR"), 31 C.F.R. Part 515, and are being held by the Comptroller as custodian of abandoned property. Dkt. Nos. 7 ("Trans-Cuba Petition"); 17 ("Cuban Entities Petition"); 21 ("Escheated Accounts Petition"). Specifically, Plaintiffs seek turnover of (1) Compania Petrolera Trans-Cuba ("Trans-Cuba") accounts, (2) Banco Nacional de Cuba ("Banco Nacional") and other Cuban corporation accounts, and (3) accounts that have allegedly escheated to Cuba under its abandonment and inheritance laws. Trans-Cuba Pet.; Cuban Entities Pet.; Escheated Accounts Pet. The Comptroller has filed Responses opposing Plaintiffs' Petitions. Dkt. Nos. 27 ("Comptroller Response - First and Second Petitions"); 39 ("Comptroller Response - Escheated Accounts Petition"). The United States has filed a statement of interest pursuant to 28 U.S.C. § 517, opposing Plaintiffs' Petitions. Dkt. No. 46 ("United States Statement of Interest"). Plaintiffs have also filed a Motion for entry of a 28 U.S.C. § 1610(c) order. 1610(c) Mot.

II. BACKGROUND
A. Factual Background

The following facts are drawn from the Florida state court's findings of fact. Dkt. No. 6-8 ("Florida Judgment"). Plaintiffs are the sons of Gustavo Villoldo Argilagos, a dual citizen of the United States and Cuba. Id. at 2. Before the Cuban Revolution in January 1959, Mr. Villoldo was a successful businessman in Cuba and owned several businesses, including one of the first General Motors dealerships in Cuba, and held numerous pieces of real estate. Id. at 3. After the Revolution, Mr. Villoldo and his family were targeted by Defendants on account of Mr. Villoldo's wealth andAmerican citizenship. Id. at 3-4. Mr. Villoldo and his sons were imprisoned, beaten, and threatened with execution. Id. at 4-5. On several occasions, Mr. Villoldo was removed from his home at gunpoint. Id. at 5. He was told repeatedly that his family would be killed unless he surrendered his property and took his own life. Id. On February 16, 1959, Mr. Villoldo's body was found in his home, the result of an apparent suicide. Id. Plaintiffs fled Cuba and have resided in the United States since 1960. Id. at 2. Defendants have continued to pursue efforts to assassinate Plaintiffs and have threatened Plaintiffs with assassination as recently as 2003. Id. at 5.

B. Procedural History

Defendants were duly served with process in the Florida state proceedings but failed to appear. Florida Judgment at 2. On August 19, 2011, following a non-jury trial, the Florida state court found that Defendants were liable under 28 U.S.C. § 1605A for acts of torture committed against Plaintiffs. Id. at 6. The court awarded Plaintiffs $2.79 billion, including $1 billion in punitive damages. Id. at 7-8.

Plaintiffs commenced the instant action on May 15, 2014. See Dkt. No. 1. On June 6, 2014, Plaintiffs served the Comptroller's Office of Unclaimed Funds ("OUF") with a subpoena, authorized by the Court, seeking the most recent Office of Foreign Assets Control ("OFAC") report related to the CACR. Dkt. No. 27-1 ("Duvall Affidavit") ¶ 4. The OFAC report is provided annually by the Comptroller to the OFAC of the U.S. Department of the Treasury regarding assets within the OUF's possession that have been blocked pursuant to OFAC regulations, including the CACR. Id. ¶ 3. Plaintiffs subsequently filed a Motion for entry of a 28 U.S.C. § 1610(c) order and the Petitions to turnover various blocked assets held by the Comptroller. 1610(c) Mot.; Trans-Cuba Pet.; Cuban Entities Pet.; Escheated Accounts Pet. Plaintiffs have served the Comptroller with aWrit of execution, but the Court stayed any action by Plaintiffs to enforce that Writ pending further order. Dkt. Nos. 20; 23.

III. LEGAL STANDARDS
A. N.Y. C.P.L.R. § 5225(b)

Plaintiffs' Petitions are filed under New York Civil Practice Law and Rules ("N.Y. C.P.L.R.") § 5225(b) pursuant to Federal Rule of Civil Procedure 69. Federal Rule of Civil Procedure 69 provides that "[t]he procedure on execution—and in proceedings supplementary to and in aid of judgment or execution—must accord with the procedure of the state where the court is located." FED. R. CIV. P. 69(a)(1). Section 5225(b) provides that a judgment creditor may institute a proceeding against a third-party in possession of a debtor's funds, and "where it is shown that the judgment debtor is entitled to the possession of such property . . . the court shall require such person to pay the money." N.Y. C.P.L.R. § 5225(b).2

A court "must conduct a trial on disputed issues of fact on adverse claims in a turnover matter." HBE Leasing Corp. v. Frank, 48 F.3d 623, 633 (2d Cir. 1995) (quoting General Motors Acceptance Corp. v. Norstar Bank of Hudson Valley, 549 N.Y.S.2d 862, 863 (App. Div. 1989)); see also Port of New York Authority v. 62 Cortlandt St. Realty Co., 219 N.E.2d 797, 799 (N.Y. 1966) ("The standards of summary judgment applied to actions should also be applied by the court to [special proceedings]."). A court shall grant summary judgment if "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)."Only disputes over facts that might affect the outcome of the suit under the governing law will properly preclude the entry of summary judgment." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). A court must resolve all ambiguities and draw all reasonable inferences in favor of the non-moving party. Reeves v. Sanderson Plumbing Prods., Inc., 530 U.S. 133, 150 (2000); Nora Beverages, Inc. v. Perrier Grp. of Am., Inc., 164 F.3d 736, 742 (2d Cir. 1998).

B. Cuban Assets Control Regulations

The CACR, 31 C.F.R. Part 515, was promulgated in 1963 under § 5(b) of the Trading With the Enemy Act of 1917 ("TWEA"), 50 U.S.C. App. § 1 et seq. Regan v. Wald, 468 U.S. 222, 226 (1984). Section 5(b) of the TWEA authorizes the President to prohibit or regulate any transactions involving "any property in which any foreign country or a national thereof has any interest." 50 U.S.C. App. § 5(b)(1). The CACR imposed an embargo on Cuba and "w[as] originally adopted to deal with the peacetime emergency created by Cuban attempts to destabilize governments throughout Latin America." Regan, 468 U.S. at 226.

The CACR prohibits any transactions in property in which Cuba or a Cuban national "has at any time . . . had any interest of any nature whatsoever, direct or indirect," unless authorized by the Secretary of the Treasury. 31 C.F.R. § 515.201(a). Prohibited transactions include "any actual or purported act or transaction . . . the purpose, intent, or effect of which is to . . . transfer, or alter, directly or indirectly, any right, remedy, power, privilege, or interest with respect to any property." Id. § 515.310. The Secretary of the Treasury may issue a license authorizing a prohibited transaction. Id. § 515.203(c).

C. Foreign Sovereign Immunities Act and Terrorism Risk Insurance Act

The FSIA provides "the sole basis for obtaining jurisdiction over a foreign state in the courtsof this country." Argentine Republic v. Amerada Hess Shipping Corp., 488 U.S. 428, 434 (1989). Foreign states are immune from the jurisdiction of federal and state courts unless one of the exceptions contained in §§ 1605-1607 applies. 28 U.S.C. § 1604. The "terrorism exception"—codified at § 1605A"abrogates immunity for those foreign states officially designated as state sponsors of terrorism by the Department of State where the foreign state commits a terrorist act or provides material support for the commission of a terrorist act and the act results in the death or personal injury of a United States citizen." Weinstein v. Islamic Republic of Iran, 609 F.3d 43, 48 (2d Cir. 2010). Cuba was designated as a state sponsor of terrorism in 1982. Weininger v. Castro, 462 F. Supp. 2d 457, 479 (S.D.N.Y. 2006) (citing 47 Fed. Reg. 16,623 (Apr. 19, 1982)).

The property of a foreign state is also immune from attachment unless one of the exceptions in § 1610 applies. 28 U.S.C. § 1609. The property of a foreign state used for a commercial activity in the United States is not immune from attachment if "the judgment relates to a claim for which the foreign state is not immune under section 1605A." Id. § 1610(a)(7). The property of "an agency or instrumentality of a foreign state engaged in commercial activity in the United States" is not immune from attachment if "the judgment relates to a claim for which the agency or instrumentality is not immune by virtue of section 1605A." Id. § 1610(b)(3). A judgment holder under § 1605A may...

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