Rubin v. Islamic Republic of Iran ( 2013 )

United States Court of Appeals
For the First Circuit
No. 11-2144
JENNY RUBIN, ET AL.,
Plaintiffs, Appellants,
v.
ISLAMIC REPUBLIC OF IRAN, ET AL.,
Defendants,
HARVARD UNIVERSITY, ET AL.,
Trustees, Appellees.
APPEAL FROM THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MASSACHUSETTS
[Hon. George A. O'Toole, U.S. District Judge]
Before
Howard, Stahl, and Lipez,
Circuit Judges.
Meir Katz, with whom Robert J. Tolchin and The Berkman Law
Office, LLC were on brief, for appellants.
Paul R.Q. Wolfson, with whom Mark C. Fleming, Sydenham B.
Alexander, III, Shirley X. Li Cantin, Janet R. Carter, and Wilmer
Cutler Pickering Hale and Dorr LLP were on brief, for appellee
Harvard University.
Simon J. Frankel, with whom Covington & Burling LLP, Robert J.
Muldoon, Jr., Thomas Paul Gorman, and Sherin and Lodgen LLP were on
brief, for appellee Museum of Fine Arts, Boston.
Benjamin M. Shultz, with whom Mark B. Stern and Sharon
Swingle, Attorneys, Appellate Staff, Civil Division, U.S.
Department of Justice, Stuart F. Delery, Acting Assistant Attorney
General, Carmen M. Ortiz, United States Attorney, Matthew Tuchband,
Acting Chief Counsel, Office of Foreign Assets Control, U.S.
Department of the Treasury, and Harold Hongju Koh, Legal Advisor,
U.S. Department of State, were on brief, for amicus curiae United
States.
February 27, 2013
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STAHL, Circuit Judge. The plaintiffs-appellants in this
case are United States citizens who were injured in a 1997
terrorist attack that Hamas orchestrated in Jerusalem. They sued
the Islamic Republic of Iran in the United States District Court
for the District of Columbia, alleging that Iran had provided
material support to Hamas and was therefore liable for the attack.
In 2003, the plaintiffs obtained a default judgment against Iran.
Campuzano v. Islamic Rep. of Iran, 281 F. Supp. 2d 258 (D.D.C.
2003). Seeking to collect on that judgment, they moved to attach,
by trustee process action in the District of Massachusetts, certain
antiquities that they claim are the property of Iran but that are
currently in the possession of the defendants-appellees, the Museum
of Fine Arts, Boston (MFA) and Harvard University (collectively,
"the Museums").
After several years of litigation, the district court
granted the Museums' motions to dissolve the attachments,
concluding that the Museums could invoke the objects' immunity from
attachment under the Foreign Sovereign Immunities Act, and that
although the Terrorism Risk Insurance Act provided a potential way
around that immunity, the plaintiffs had failed to meet their
burden of proving that the antiquities in question were attachable
under that statute. We agree with the district court that the
trustee attachments should be dissolved, though we take a narrower
path to reach that conclusion.
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I. Facts & Background
This action began in 2005, when the plaintiffs registered
their default judgment against Iran1 in the District of
Massachusetts and moved for orders of attachment by trustee process
against all "antiquities . . . that are the property of the Islamic
Republic of Iran" in the possession of the Museums. See Fed. R.
Civ. P. 69. At issue are approximately 500 objects in Harvard's
possession and approximately 1,485 objects held by the MFA that
originated in or near the area covered by the current borders of
Iran, including stone reliefs, sculptures, and archaeological
specimens.
The Museums moved to quash the trustee process summonses
and dissolve the attachments, arguing that Iran did not own the
antiquities and that, even if it did, the antiquities would be
immune under the Foreign Sovereign Immunities Act (FSIA), 28 U.S.C.
§§ 1602-1611, which 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," id. § 1609.
The plaintiffs responded with three arguments, raised in
a motion for partial summary judgment and an opposition to the
1
In the District of Columbia action, the plaintiffs sued Iran
and other defendants. The plaintiffs were awarded $71.5 million in
compensatory damages against all defendants and $37.5 million each
in punitive damages against all defendants except Iran. Rubin v.
Islamic Rep. of Iran, 456 F. Supp. 2d 228, 230 (D. Mass. 2006).
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motion to quash: (1) the Museums did not have standing to assert
sovereign immunity on behalf of Iran; (2) even if they did, the
"commercial use" exception to immunity under the FSIA would apply,
see id. § 1610(a)(7); and (3) in any event, the plaintiffs could
reach the antiquities under section 201(a) of the Terrorism Risk
Insurance Act of 2002 (TRIA), Pub. L. No. 107-297, § 201(a), 116
Stat. 2322, 2337 (2002) (codified at 28 U.S.C. § 1610 note), which
permits the attachment of certain "blocked assets of [a] terrorist
party." The district court found it appropriate to consider
whether the antiquities were immune under the FSIA and determined
that the "commercial use" exception did not apply, but concluded
that the plaintiffs might still be able to attach the antiquities
under section 201(a) of TRIA if they could prove that the
antiquities belonged to Iran. Rubin v. Islamic Rep. of Iran
(Rubin I), 456 F. Supp. 2d 228 (D. Mass. 2006).
The Museums moved for reconsideration of the district
court's ruling that the antiquities qualified as "blocked assets"
under TRIA, and the court issued a second order declining to alter
its previous ruling but explaining it in further detail. Rubin v.
Islamic Rep. of Iran (Rubin II), 541 F. Supp. 2d 416 (D. Mass.
2008). The court also certified for interlocutory appeal, see 28
U.S.C. § 1292(b), its rulings regarding the applicability of
section 201(a) of TRIA, the issue of whether a foreign sovereign's
immunity under the FSIA may only be raised by that sovereign, and
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the question of whether the "commercial use" exception applied,
Rubin II, 541 F. Supp. 2d at 421. The parties filed petitions for
leave to appeal, which we denied, finding that aspects of the legal
question of immunity might be bound up with the factual question of
ownership and preferring to resolve the immunity question after
ownership had been ascertained. Rubin v. Islamic Rep. of Iran,
Nos. 08-8020 & 08-8021 (1st Cir. Aug. 11, 2008).
Discovery proceeded, and the Museums once again moved to
dissolve the attachments. This time, the district court granted
their motions. The court found that, as judgment creditors, the
plaintiffs bore the burden of proving that any object on which they
sought to execute belonged to Iran, that TRIA did not alter that
burden, and that, "despite extensive discovery," the plaintiffs
were "unable to sustain their burden of showing that any particular
item held by the Museums is the property of Iran subject to
execution by means of trustee process." Rubin v. Islamic Rep. of
Iran (Rubin III), 810 F. Supp. 2d 402, 404 (D. Mass. 2011). The
court examined two Iranian laws that the plaintiffs had invoked,
one from 1930 and another from 1928, and concluded that neither
vested ownership of the antiquities in Iran. Id. at 404-06. The
court thus dissolved the trustee attachments, and this appeal
followed.
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II. Analysis
For context, we briefly summarize the complex issues that
the parties have put before us, though our resolution of this case
does not require us to delve into many of them. The plaintiffs'
main argument on appeal is that TRIA preempts state property law,
and, when read in conjunction with certain Treasury Department
regulations, gives the plaintiffs (in their words) the right to
levy against "any interest of Iran, even if that interest is less
than a full ownership interest." They further claim that Iran has
an interest in the antiquities under Iranian law that is sufficient
to make them attachable under TRIA.
The Museums, for their part, counter that TRIA does not
displace the traditional rule that a judgment creditor may execute
only against assets that a judgment debtor owns, and that the
district court was correct in concluding that Iranian law does not
vest title to the antiquities in Iran. However, the Museums also
challenge the district court's finding that the antiquities qualify
as "blocked assets" within the meaning of TRIA -- a prerequisite
for that statute to apply. See TRIA § 201(a). Finally, the
Museums urge us to find that, even if Iran owns the antiquities and
they are theoretically attachable under TRIA, the plaintiffs' claim
is barred under Massachusetts law by the three-year statute of
limitations and the Museums' adverse possession of the objects.
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Also before us is the position of the United States
Department of the Treasury's Office of Foreign Assets Control
(OFAC), which is responsible for administering and enforcing
economic and trade sanctions, including promulgating the
regulations at issue here. The United States has filed an amicus
brief articulating OFAC's views regarding two aspects of this case.
First, OFAC urges us to find that TRIA authorizes the attachment
only of those assets that are owned by the relevant terrorist
party. Second, providing its own interpretation of the Treasury
Department regulations, OFAC argues that the antiquities are not
"contested" within the meaning of those regulations, which, if
correct, would make TRIA inapplicable here.
Because we agree with OFAC that the antiquities are not
"contested," and thus conclude that they cannot qualify as "blocked
assets" under TRIA, we need not reach the broader questions of
whether TRIA preempts state law, what kind of ownership interest
suffices for an asset to be attachable under TRIA, whether Iranian
law vests title to these antiquities in Iran, or whether the
plaintiffs' claims are foreclosed by the Massachusetts statute of
limitations or the adverse possession doctrine. Before we turn our
attention to the "blocked assets" issue, however, we must address
a last-minute attempt by the plaintiffs to overcome the immunity
hurdle posed by the FSIA.
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A. The FSIA
The FSIA makes "the property in the United States of a
foreign state" immune from attachment and execution, subject to
certain exceptions, 28 U.S.C. § 1609, one of which permits the
attachment of property "used for a commercial activity in the
United States," assuming the underlying judgment "relates to a
claim for which the foreign state is not immune under section 1605A
or section 1605(a)(7) (as such section was in effect on January 27,
2008)," id. § 1610(a)(7). The plaintiffs argued before the
district court that the antiquities fell within the scope of that
exception. See Rubin I, 456 F. Supp. 2d at 233-34.2 They claimed
that the statute did not require Iran specifically to use the
antiquities for commercial purposes in the United States, but that
any party (including the Museums) could do so in order for
section 1610(a)(7) to be implicated. The district court rejected
that argument, holding that "the plain language of the statute, its
legislative history, and generally accepted principles of
international law establish that the 'commercial use' exception of
2
The plaintiffs also contended that the Museums did not have
standing to assert the immunity of the antiquities under 28 U.S.C.
§ 1609, because immunity is an affirmative defense, personal to the
sovereign. On appeal, they have not challenged the district
court's rejection of that argument, which was in accord with other
courts' rulings on the issue. See Rubin I, 456 F. Supp. 2d at 231-
32; see also Walters v. Indus. & Commercial Bank of China, Ltd.,
651 F.3d 280, 290 (2d Cir. 2011); Rubin v. Islamic Rep. of Iran,
637 F.3d 783, 801 (7th Cir. 2011); Peterson v. Islamic Rep. of
Iran, 627 F.3d 1117, 1128-29 (9th Cir. 2010); Walker Int'l Holdings
Ltd. v. Rep. of Congo, 395 F.3d 229, 233 (5th Cir. 2004).
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§ 1610 applies only where it is the foreign sovereign who engages
in the commercial activity." Id. at 234.
In their opening brief on appeal, the plaintiffs did not
challenge that holding. However, after the Museums addressed
section 1610(a)(7) in their briefs, the plaintiffs filed a reply
brief, arguing for the first time that we should permit execution
under section 1610(g) of the FSIA, see 28 U.S.C. § 1610(g), which
Congress enacted in January 2008 as part of the National Defense
Authorization Act (NDAA), Pub. L. No. 110-181, § 1083(b)(3)(D), 122
Stat. 3, 341-42 (2008). The plaintiffs read section 1610(g) as
allowing a judgment creditor to execute against "any property
interest" whatsoever of a foreign state.
The NDAA provides that qualifying judgments entered under
the old version of the FSIA should, "on motion made by plaintiffs
to the United States district court where the action was initially
brought . . . be given effect as if the action had originally been
filed under" the new version of the statute. NDAA § 1083(c)(2)(A).
In March 2008, the plaintiffs filed such a motion in the D.C.
district court where they had obtained the default judgment, and
the motion was granted in June 2008.3 Rubin v. Islamic Rep. of
3
After the plaintiffs filed their motion for retroactive
application of the NDAA, the Museums wrote a letter to the D.C.
district court, arguing that the plaintiffs had not satisfied the
requirements of section 1083(c)(2)(A) of the NDAA. Rubin v.
Islamic Rep. of Iran, 270 F.R.D. 7, 9 (D.D.C. 2010). However, the
court did not receive the Museums' letter until the day it granted
the plaintiffs' motion, id. at 9 n.2, and it denied as untimely the
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Iran, 270 F.R.D. 7, 9 (D.D.C. 2010). The Massachusetts district
court issued its initial immunity ruling in this case in 2006, see
Rubin I, 456 F. Supp. 2d 228, but it certified that ruling for
interlocutory appeal in March 2008 (two months after the enactment
of the NDAA and three days after the plaintiffs filed their motion
for retroactive application of the NDAA with the D.C. district
court), see Rubin II, 541 F. Supp. 2d at 421, and the case
continued before the Massachusetts district court well into 2011,
see Rubin III, 810 F. Supp. 2d 402.
At no point, however, did the plaintiffs bring the FSIA
amendment or the 2008 D.C. district court decision to the attention
of the Massachusetts district court in the instant trustee process
action. Nor did the plaintiffs make any argument pertaining to
section 1610(g) in their opening brief on appeal.4 They made the
argument for the first time in their reply brief, claiming that
they had no opportunity to raise the applicability of section
1610(g) before the district court. We reject that excuse, given
that more than three years passed between the amendment of the FSIA
Museums' later motion to intervene for the purpose of seeking
reconsideration, id. at 12.
4
In their reply brief, the plaintiffs place great weight on
the fact that the Museums tried to intervene in the 2008 D.C.
district court action and thus were on notice that the plaintiffs
might attempt to invoke section 1610(g) in the Massachusetts
proceeding. That does not, however, excuse the plaintiffs' failure
to raise their section 1610(g) argument before the Massachusetts
district court or in their opening brief on appeal.
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and the district court's final ruling in this case. In any event,
the plaintiffs have provided no compelling explanation for their
additional failure to invoke section 1610(g) in their opening brief
on appeal.
We therefore refuse to consider the applicability of
section 1610(g). See Anderson v. Hannaford Bros. Co., 659 F.3d
151, 158 n.5 (1st Cir. 2011) (reiterating the basic rule that an
argument not raised before the district court is deemed waived);
N. Am. Specialty Ins. Co. v. Lapalme, 258 F.3d 35, 45 (1st Cir.
2001) ("There are few principles more securely settled in this
court than the principle which holds that, absent exceptional
circumstances, an appellant cannot raise an argument for the first
time in a reply brief.").
B. TRIA
Nonetheless, under certain circumstances, TRIA permits
the attachment of property that might otherwise be immune under the
FSIA. See Bennett v. Islamic Rep. of Iran, 618 F.3d 19, 21 (D.C.
Cir. 2010). The relevant section of TRIA provides that
"[n]otwithstanding any other provision of law . . . , a person
[who] has obtained a judgment against a terrorist party on a claim
based upon an act of terrorism" may attach and execute on "the
blocked assets of that terrorist party (including the blocked
assets of any agency or instrumentality of that terrorist party)"
in order to satisfy the judgment. TRIA § 201(a). TRIA thereby
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allows a person to circumvent the normal process for attaching
assets that are blocked under a sanctions program, which entails
obtaining a license from OFAC. See, e.g., 31 C.F.R. §§ 535.201,
535.310, 515.201, 515.310, 594.201, 594.312.
There exists some debate as to whether TRIA preempts
state property law and whether the phrase "assets of that terrorist
party" in section 201(a) means that the terrorist party must
actually own the assets. Compare Hausler v. JPMorgan Chase Bank,
N.A., 845 F. Supp. 2d 553, 562-68 (S.D.N.Y. 2012), and Hausler v.
JP Morgan Chase Bank, N.A., 740 F. Supp. 2d 525, 529-39 (S.D.N.Y.
2010), with Calderon-Cardona v. JPMorgan Chase Bank, N.A., 867 F.
Supp. 2d 389, 399-405 (S.D.N.Y. 2011). But even if we assume,
simply for the sake of argument, that the antiquities at issue here
qualify as "assets of" Iran under section 201(a), they would also
need to be "blocked" in order to fall within TRIA's scope. See
Ministry of Def. & Support for the Armed Forces of the Islamic Rep.
of Iran v. Elahi, 556 U.S. 366, 369 (2009) ("[W]e initially decide
whether Iran's Cubic Judgment is a 'blocked asset' within the terms
of [TRIA]."). That question of law, whether viewed as one of
statutory interpretation or one of foreign sovereign immunity, is
subject to de novo review. See Hernández-Miranda v. Empresas Díaz
Massó, Inc., 651 F.3d 167, 170 (1st Cir. 2011); Ungar v. Palestine
Liberation Org., 402 F.3d 274, 288 (1st Cir. 2005).
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The plaintiffs claim that the Museums did not appeal the
district court's decision that the antiquities are "blocked assets"
under TRIA and thus argue that that order is "the law of this
case." Not so. At the Museums' request, the district court
certified its "blocked assets" ruling for interlocutory appeal.
See Rubin II, 541 F. Supp. 2d at 421. The Museums then filed a
petition for permission to appeal under 28 U.S.C. § 1292(b), which
we denied. Rubin v. Islamic Rep. of Iran, Nos. 08-8020 & 08-8021
(1st Cir. Aug. 11, 2008). At the time, we believed that the
"blocked assets" question might be bound up with the factual
question of ownership and was best resolved, if necessary, after
the district court had determined who owned the antiquities. Id.Now, with the benefit of further factual development and, more
importantly, of briefing by OFAC, we find the issue dispositive.
In any event, this is the first opportunity the Museums have had to
raise their "blocked assets" argument on appeal.
TRIA defines the phrase "blocked asset" as "any asset
seized or frozen by the United States . . . under sections 202 and
203 of the International Emergency Economic Powers Act" (IEEPA),
Pub. L. No. 95-223, §§ 202-203, 91 Stat. 1625, 1626 (1977)
(codified at 50 U.S.C. §§ 1701-1702). TRIA § 201(d)(2)(A). We
have described the IEEPA as codifying "Congress's intent to confer
broad and flexible power upon the President to impose and enforce
economic sanctions against nations that the President deems a
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threat to national security interests." United States v. McKeeve,
131 F.3d 1, 10 (1st Cir. 1997). OFAC is responsible for
administering sanctions imposed under the IEEPA.
In 1979, in response to the Iranian hostage crisis,
President Carter issued an IEEPA-based executive order ("the 1979
order"), which OFAC later implemented though regulations, blocking
all transactions involving "property subject to the jurisdiction of
the United States or which is in the possession of or control of
persons subject to the jurisdiction of the United States" in which
Iran had "any interest of any nature whatsoever," unless OFAC
authorized the transaction. 31 C.F.R. § 535.201; see also Exec.
Order No. 12,170, 44 Fed. Reg. 65,729 (Nov. 14, 1979).
OFAC's 1979 blocking order remains in place, but its
effect was significantly circumscribed by the 1981 Algiers Accords,
pursuant to which the United States and Iran resolved the hostage
crisis and the United States promised to "revoke all trade
sanctions" that had been directed against Iran since November 1979
and to arrange "for the transfer to Iran of all Iranian properties
. . . located in the United States" that were not addressed by
other parts of the agreement. Declaration of the Government of the
Democratic and Popular Republic of Algeria, U.S.-Iran, Jan. 19,
1981, 20 I.L.M. 224, 227; see also Elahi, 556 U.S. at 370. As part
of the Accords, President Carter issued Executive Order 12,281
("the 1981 order"), which directed "[a]ll persons subject to the
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jurisdiction of the United States in possession or control of
properties, not including funds and securities, owned by Iran or
its agencies, instrumentalities, or controlled entities" to
"transfer such properties, as directed after the effective date of
this Order by the Government of Iran." 46 Fed. Reg. 7,923, 7,923
(Jan. 19, 1981). The Algiers Accords automatically unblocked most
Iranian assets that existed in this country at the time. Weinstein
v. Islamic Rep. of Iran, 609 F.3d 43, 55 (2d Cir. 2010).
OFAC's implementing regulation closely mirrors the
language of the 1981 order. It requires "all persons subject to
the jurisdiction of the United States in possession or control of
properties, as defined in [31 C.F.R. § 535.333] . . . to transfer
such properties held on January 18, 1981 as directed after that day
by the Government of Iran." 31 C.F.R. § 535.215(a). Section
535.333, in turn, defines the universe of "properties" unblocked by
the 1981 order: "all uncontested and non-contingent liabilities and
property interests of the Government of Iran, its agencies,
instrumentalities, or controlled entities, including debts." Id.§ 535.333(a).5 A property interest cannot be "contested" under
section 535.333 unless "the holder thereof reasonably believes that
5
The "contested"/"uncontested" distinction in 31 C.F.R.
§ 535.333 was apparently meant to clarify that "Iran was not
entitled to possession of properties owned by others or if it had
only a partial or contingent interest in such property." Islamic
Rep. of Iran v. United States, 28 Iran-U.S. Cl. Trib. Rep. 112,
127, 1992 WL 928957 (1992).
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Iran does not have title or has only partial title to the asset."
Id. § 535.333(c). "After October 23, 2001, such a belief may be
considered reasonable only if it is based upon a bona fide opinion,
in writing, of an attorney licensed to practice within the United
States stating that Iran does not have title or has only partial
title to the asset." Id.
Thus, to further narrow the issue, we must determine
whether the antiquities in the Museums' possession are "contested"
within the meaning of the OFAC regulations and therefore blocked
under the 1979 order (in which case they would be attachable under
TRIA), or whether they are "uncontested" and therefore unblocked
under the 1981 order (in which case they would not be attachable
under TRIA).6
In resolving that question, the district court
unfortunately did not have the benefit of briefing by OFAC, which
only became involved in this matter on appeal. The court
recognized that the 1981 order and regulations envision a "binary"
contest of ownership between Iran and an asset holder in the United
States. Rubin II, 541 F. Supp. 2d at 419. The court, however,
read TRIA as inserting the interests of a third-party judgment
creditor into that equation. An asset can become "contested," the
6
The plaintiffs have not claimed that any of the antiquities
at issue here qualify as "blocked assets" under the President's
February 2012 Iranian asset blocking order, see Exec. Order No.
13,599, 77 Fed. Reg. 6,659 (Feb. 5, 2012), or any other sanctions
regime.
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court concluded, where the judgment creditor asserts Iran's
ownership of the property, id. at 419-20, "notwithstanding the
absence of any contest between the actual holder and Iran," id. at
419. The court's construction was based, in part, on the fact
that, under Massachusetts law, "[a] creditor's assertion that
property held by a putative trustee belongs to the debtor and may
be taken by the creditor for application against the debt is
fundamental to trustee process." Id. at 420.
On appeal, OFAC directs our attention to the plain
language of the 1981 order and regulation, which require a transfer
only "as directed . . . by the Government of Iran." 46 Fed. Reg.
at 7,923; 31 C.F.R. § 535.215(a). That, OFAC argues, is a
condition precedent for the rest of what the regulations envision.
Only if Iran directs the transfer of an asset being held in the
United States must the property holder transfer the asset, or
challenge Iran's ownership by obtaining an opinion of counsel, see
31 C.F.R. § 535.333(c), which would make the asset "contested,"
id., at least until ownership is ascertained. In the absence of
any claim by Iran, however, the asset remains "uncontested." Id.§ 535.333(a).
OFAC also notes that TRIA was drafted against the
backdrop of the relevant regulations, not the other way around.
The regulations were last amended in 2001, a year before TRIA was
enacted. See 66 Fed. Reg. 38,553 (July 25, 2001). We agree with
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OFAC that it was therefore inappropriate for the district court to
interpret the regulations in light of the later-enacted TRIA. See
Miles v. Apex Marine Corp., 498 U.S. 19, 32 (1990) ("We assume that
Congress is aware of existing law when it passes legislation.").
That is particularly true given Congress's explicit reference to
the IEEPA, and by extension the OFAC regulations that implement
IEEPA-based executive orders, through its use of the phrase
"blocked assets" in TRIA. TRIA § 201(d)(2)(A).
Because Iran has never made a claim to, or directed
transfer of, any of the antiquities at issue here, Rubin III, 810
F. Supp. 2d at 406 n.3; Rubin II, 541 F. Supp. 2d at 420, OFAC
argues that the antiquities cannot be "contested" for purposes of
31 C.F.R. § 535.333. We must defer to OFAC's interpretation unless
it is "plainly erroneous or inconsistent with the regulation[s]."
Chase Bank USA, N.A. v. McCoy, 131 S. Ct. 871, 880 (2011) (citation
and internal quotation marks omitted). The fact that blocked
assets play an important role in the conduct of United States
foreign policy may provide a further reason for deference to the
views of the executive branch in this case, see Rep. of Austria v.
Altmann, 541 U.S. 677, 701-02 (2004); Estate of Heiser v. Islamic
Rep. of Iran, ___ F. Supp. 2d ___, 2012 WL 3776705, at *10 (D.D.C.
Aug. 31, 2012), but we need not rely on that alternate ground,
because we find OFAC's interpretation to be a reasonable one.
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Two additional points bolster OFAC's view. First, the
regulations clearly state that "property interests shall not be
deemed to be contested solely because they are subject to an
attachment," 31 C.F.R. § 535.333(d), and we have some doubt as to
whether the district court's holding can be squared with that
language.
Second, we are not convinced that OFAC's interpretation
entirely "negate[s] TRIA's remedy as to judgment creditors of
Iran." Rubin II, 541 F. Supp. 2d at 420. If Iran directed a
transfer of the antiquities, and the Museums contested ownership,
the antiquities might qualify as "blocked assets" within the
meaning of TRIA. Furthermore, "Iran is the subject of numerous
sanctions and blocking programs," Levin v. Bank of N.Y., No. 09 CV
5900, 2011 WL 812032, at *13 (S.D.N.Y. Mar. 4, 2011), and there may
well be other blocked Iranian assets that the plaintiffs can reach,
including bank assets, see, e.g., Weinstein, 609 F.3d at 56(allowing relatives of victim of Iran-sponsored terrorism to attach
assets of Bank Melli, an instrumentality of Iran); Weinstein v.
Islamic Rep. of Iran, 274 F. Supp. 2d 53, 61-62 (D.D.C. 2003)
(allowing survivors of suicide-bombing victim to attach assets held
in two bank accounts formerly used by Iranian consulates in the
United States). The pool of assets available to the plaintiffs
does appear to be quite limited, see Estate of Heiser, 2012 WL
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3776705, at *6, which is certainly lamentable, but we cannot
rewrite the statutory or regulatory text.
We therefore defer to OFAC's reasonable position that an
asset can be "contested" for purposes of 31 C.F.R. § 535.333 only
if Iran itself has claimed an interest in the asset. See Chase
Bank, 131 S. Ct. at 880. Iran has never made such a claim with
regard to the antiquities in the Museums' possession. Thus, even
if we assume that those antiquities qualify as "assets of" Iran
under section 201(a) of TRIA, they would be "uncontested" assets
that were unblocked in 1981, pursuant to Executive Order 12,281.
The 1979 order and 31 C.F.R. § 535.201 are thus inapplicable here.
Because the plaintiffs have relied on no other authority to support
their claim that the antiquities are "blocked" within the meaning
of TRIA, we conclude that the antiquities are not attachable under
that statute. TRIA §§ 201(a), (d)(2)(A).
Having reached that conclusion, we need not decide
whether the Museums' belief that Iran does not own the antiquities
could be "reasonable" in the absence of a "bona fide opinion, in
writing, of an attorney licensed to practice within the United
States stating that Iran does not have title or has only partial
title to the asset." 31 C.F.R. § 535.333(c); see Rubin II, 541 F.
Supp. 2d at 420-21. The Museums would have had the duty to obtain
such an opinion only if Iran had made a demand for the antiquities
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and the Museums wished to contest ownership. See 31 C.F.R.
§§ 535.215(a), 535.333(a).
III. Conclusion
While we are mindful of the incident that gave rise to
the judgment here and the difficulty the plaintiffs are having
collecting on that judgment, the general rule is that foreign
sovereign property in the United States is immune from attachment
and execution. See 28 U.S.C. § 1609. TRIA carves out a narrow
exception to that rule, applicable only to "blocked assets," and
the plaintiffs have failed to demonstrate that any of the
antiquities in the Museums' possession fall within that exception.
TRIA therefore does not nullify the antiquities' immunity from
execution under the FSIA, and the plaintiffs have waived any
challenge to that immunity on appeal.
Thus, while we disagree with the district court's
judgment that the antiquities qualify as "blocked assets" under
TRIA, Rubin II, 541 F. Supp. 2d 416, we affirm its conclusion that
the plaintiffs' Motion for Order of Attachment by Trustee Process
should be denied and that the Museums' motions to dissolve the
attachments should be granted.
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