Caballero v. Fuerzas Armadas Revolucionaria ( 2019 )

FILED
United States Court of Appeals
PUBLISH Tenth Circuit
UNITED STATES COURT OF APPEALS December 27, 2019
Elisabeth A. Shumaker
FOR THE TENTH CIRCUIT Clerk of Court
_________________________________
ANTONIO CABALLERO,
Plaintiff - Appellant,
v. No. 19-4037
FUERZAS ARMADAS
REVOLUCIONARIAS DE COLOMBIA,
a/k/a FARC-EP, a/k/a Revolutionary
Armed Forces of Colombia; EJERCITO
DE LIBERACION NACIONAL, a/k/a
ELN, a/k/a National Liberation Army;
THE NORTE DE VALLE CARTEL,
Defendants - Appellees.
_________________________________
Appeal from the United States District Court
for the District of Utah
(D.C. No. 2:17-CV-00315-CW)
_________________________________
Submitted on the briefs:*
Bradley R. Helsten, Zumpano Patricios & Helsten, LLC, Holladay, Utah, Joseph I.
Zumpano, Leon N. Patricios, Rossana Baeza, Zumpano Patricios, P.A., Coral Gables,
Florida, on behalf of the Plaintiff-Appellant.
_________________________________
Before EID, KELLY, and CARSON, Circuit Judges.
*
After examining the briefs and appellate record, this panel has determined
unanimously that oral argument would not materially assist in the determination of
this appeal. See Fed. R. App. P. 34(a)(2); 10th Cir. R. 34.1(G). The case is therefore
ordered submitted without oral argument.
_________________________________
KELLY, Circuit Judge.
_________________________________
Antonio Caballero filed the underlying lawsuit in the United States District
Court for the District of Utah seeking a “judgment on a judgment” he had obtained
from a Florida state court. The federal district court registered the Florida state-court
judgment under 28 U.S.C. § 1963, but denied all other relief because Mr. Caballero
did not establish personal jurisdiction over the defendants. As a result, Mr. Caballero
could not utilize federal district court collection procedures. Mr. Caballero then filed
a motion to alter or amend the judgment, which the district court denied. He appeals
both orders. We exercise jurisdiction under 28 U.S.C. § 1291, and reverse and
remand for further proceedings.
I. BACKGROUND
Mr. Caballero sued the defendants in Florida state court, where he obtained a
judgment for over $190 million. He then filed the underlying action in Utah federal
court alleging that the defendants are Colombian drug traffickers who kidnapped,
tortured, and killed his father to facilitate their trafficking and distribution of illicit
drugs. The federal complaint further alleged that the defendants, through their agents
and representatives, were trafficking millions of dollars of illicit drugs into and
through Utah and, further, that their “vicious and vile acts against [Mr. Caballero]
and his family were a necessary component part of this scheme.” Aplt. App. Vol. 1,
at 10.
2
Mr. Caballero requested a “judgment on a judgment” to have the federal court
enter a judgment and authorize collection procedures. His complaint asserted that he
“expects to proceed against assets located in Utah pursuant to the Terrorism Risk
Insurance Act of 2002, [Pub. L. No. 107-297, § 201(a), 116 Stat. 2322, 2337,
codified as a note to 28 U.S.C. § 1610 (TRIA)], and to take discovery as to assets
owned by the Defendants or their agencies and instrumentalities.” Id. at 9. He
served the defendants with process in the federal suit; none of the defendants
answered or otherwise participated in the Utah federal action.
The district court registered the judgment under 28 U.S.C. § 1963, despite
Mr. Caballero’s request to enter a “judgment on a judgment” pursuant to 28 U.S.C.
§ 1738, and denied all other relief, holding that he had not demonstrated personal
jurisdiction over the defendants. Mr. Caballero filed a motion to alter or amend the
judgment pursuant to Fed. R. Civ. P. 59(e), seeking to have the court enter a new
federal judgment. The district court denied the motion. Mr. Caballero appeals,
arguing that § 1963 is limited to registration of a federal judgment in another federal
court, and he is entitled to a new judgment, which would allow him to use collection
remedies.
II. JURISDICTION AND STANDARDS OF REVIEW
“Federal courts are courts of limited jurisdiction, possessing only that power
authorized by Constitution and statute.” Gunn v. Minton, 568 U.S. 251, 256 (2013)
(internal quotation marks omitted). “Federal subject matter jurisdiction is elemental,
and must be established in every cause under review in the federal courts.” Safe
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Streets All. v. Hickenlooper, 859 F.3d 865, 878 (10th Cir. 2017) (brackets and
internal quotation marks omitted). The party invoking a federal court’s jurisdiction
bears the burden of establishing subject-matter jurisdiction. Id. “A court lacking
jurisdiction cannot render judgment but must dismiss the cause at any stage of the
proceedings in which it becomes apparent that jurisdiction is lacking.” Id. (internal
quotation marks omitted).
“Questions of statutory interpretation . . . are pure questions of law that we
review de novo.” May v. Segovia, 929 F.3d 1223, 1227 (10th Cir. 2019). We also
review de novo the legal question of jurisdiction. TransAm Trucking, Inc. v. Fed.
Motor Carrier Safety Admin., 808 F.3d 1205, 1210 (10th Cir. 2015). “We review
rulings on Rule 59(e) motions for an abuse of discretion. A court abuses its
discretion when basing its decision on an erroneous legal conclusion.” Nelson v. City
of Albuquerque, 921 F.3d 925, 929 (10th Cir. 2019) (citation omitted).
III. DISCUSSION
A. Section 1963
The district court registered the Florida state-court judgment under 28 U.S.C.
§ 1963, which provides:
A judgment in an action for the recovery of money or property entered in
any court of appeals, district court, bankruptcy court, or in the Court of
International Trade may be registered by filing a certified copy of the
judgment in any other district or, with respect to the Court of International
Trade, in any judicial district, when the judgment has become final by
appeal or expiration of the time for appeal or when ordered by the court that
entered the judgment for good cause shown. . . . A judgment so registered
shall have the same effect as a judgment of the district court of the district
where registered and may be enforced in like manner.
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Federal courts disagree on whether a state-court judgment may be registered in a
federal district court under § 1963. The Seventh Circuit has held that § 1963 does not
prohibit removal of a state-court judgment to federal court if other requirements for
federal jurisdiction are met. GE Betz, Inc. v. Zee Co., 718 F.3d 615, 625 (7th Cir. 2013).
In reaching this conclusion, the court determined that “[r]eading a bar against the
enforcement of state-court judgments by federal courts requires reading additional words
into § 1963 that are not there.” Id. at 624; but see id. at 623-24 (listing “a host of district
court decisions” holding that § 1963 does not authorize a federal court to register a state-
court judgment (collecting cases)).
In contrast, the Second Circuit found support in § 1963 itself for its view that a
new court action must be filed to enforce a judgment entered by a non-federal court.
Mobil Cerro Negro, Ltd. v. Bolivarian Republic of Venezuela, 863 F.3d 96, 99
(2d Cir. 2017). “‘By its express terms § 1963 applies only to registration of federal-
court judgments in another federal court.’” Id. at 123 (quoting Caruso v. Perlow,
440 F. Supp. 2d 117, 118 (D. Conn. 2006)) (brackets omitted); see also, e.g., Fox
Painting Co. v. NLRB, 16 F.3d 115, 117 (6th Cir. 1994) (finding “unambiguous”
§ 1963’s language specifying the courts whose judgments can be registered in federal
district courts)1; Euro-Am. Coal Trading, Inc. v. James Taylor Mining, Inc., 431 F.
1
Although Fox Painting was announced before the 1996 amendment to
§ 1963, which added the courts of appeals and the bankruptcy courts as courts whose
judgments can be registered in another jurisdiction, see Federal Courts Improvement
Act of 1996, Pub. L. No. 104-317, 110 Stat. 3847, the amendment does not detract
from Fox Painting’s determination that § 1963’s “language is unambiguous.”
16 F.3d at 117.
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Supp. 2d 705, 708 (E.D. Ky. 2006) (“[T]he registration procedures of 28 U.S.C.
§ 1963 contain jurisdictional limitations that prohibit federal courts from registering
state court judgments.”)
We join the courts holding that § 1963 applies only to registration of federal-
court judgments in federal courts—not to state-court judgments. Consequently, we
reverse the district court’s judgment registering the Florida state-court judgment in
Utah federal court.
B. Section 1738
We next consider Mr. Caballero’s position that 28 U.S.C. § 1738 provides a
jurisdictional basis for granting him a “judgment on a judgment.” We conclude that
it does not.
As relevant here, § 1738 provides:
Such Acts [of state legislatures], records and judicial proceedings or copies
thereof, so authenticated [as described herein] shall have the same full faith
and credit in every court within the United States and its Territories and
Possessions as they have by law or usage in the courts of such State,
Territory or Possession from which they are taken.
Section 1738 is a rule of decision, not an independent basis of jurisdiction.
“[T]he Full Faith and Credit Clause, in either its constitutional or statutory
incarnations, does not give rise to an implied federal cause of action.” Thompson v.
Thompson, 484 U.S. 174, 182 (1988) (citing Minnesota v. N. Sec. Co., 194 U.S. 48,
72 (1904)). In other words, Ҥ 1738[] has no bearing on the question of whether a
district court has subject matter jurisdiction to hear a claim.” Vera v. Republic of
Cuba, 867 F.3d 310, 320 (2d Cir. 2017); accord Adar v. Smith, 639 F.3d 146, 157
6
(5th Cir. 2011) (en banc) (holding the Full Faith and Credit Clause “affords a rule of
decision in state courts”). Therefore, Mr. Caballero cannot rely on § 1738 to supply
federal subject-matter jurisdiction.
C. TRIA
Because Mr. Caballero may not register the Florida state-court judgment in
federal district court under § 1963, and § 1738 does not provide a basis for federal
jurisdiction, he was required to file a new action in federal district court and establish
federal subject-matter jurisdiction over the new action. Although Mr. Caballero filed
a new action, he did not demonstrate that the federal district court had subject-matter
jurisdiction.
Mr. Caballero’s civil cover sheet filed in the district court indicates that the
basis of jurisdiction is a federal question. Aplt. App. Vol. 1, at 16. 28 U.S.C. § 1331
provides that federal district courts “shall have original jurisdiction of all civil
actions arising under the . . . laws . . . of the United States.” In his complaint,
Mr. Caballero stated that he “expects to proceed against assets located in Utah
pursuant to the [TRIA], and to take discovery as to assets owned by the Defendants
or their agencies and instrumentalities.” Aplt. App. Vol. 1, at 9. His opening brief
on appeal also relies on § 1331 and the TRIA for jurisdiction. Aplt. Br. at 1.
The TRIA reads as follows:
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
section 1605(a)(7) of title 28, United States Code, the blocked assets of that
terrorist party (including the blocked assets of any agency or instrumentality of
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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.
Pub. L. No. 107-297, § 201(a), 116 Stat. 2322, 2337, codified as a note to 28 U.S.C.
§ 1610.
“The TRIA provides courts with subject matter jurisdiction over post-judgment
execution and attachment proceedings” where the plaintiff has complied with the
TRIA’s requirements. Vera, 867 F.3d at 321. A judgment creditor may establish
federal subject-matter jurisdiction to attach a defendant’s property by satisfying the
showing required by the TRIA: “(1) [the defendant] is a ‘terrorist party,’ and (2) its
assets are ‘blocked assets.’” Kirschenbaum v. Assa Corp., 934 F.3d 191, 198 (2d Cir.
2019).
TRIA defines ‘blocked assets’ as any asset seized or frozen by the
United States under section 5(b) of the Trading With the Enemy Act . . . or
under sections 202 and 203 of the International Emergency Economic
Powers Act . . . . Assets are blocked when the United States Department of
the Treasury Office of Foreign Assets Control . . . designates the owner of
the assets as a Specially Designated Narcotics Trafficker . . . .
Stansell v. Revolutionary Armed Forces of Colombia, 771 F.3d 713, 723 (11th Cir.
2014) (internal quotation marks omitted); see also United States v. All Funds on
Deposit with R.J. O’Brien & Assocs., 783 F.3d 607, 615 (7th Cir. 2015) (“[P]er
TRIA’s text, victims of terror may only execute on ‘blocked’ funds.”). In addition,
“[i]f the party wishes to execute against the assets of a terrorist party’s agency or
instrumentality, the party must further establish that the purported agency or
instrumentality is actually an agency or instrumentality.” Stansell, 771 F.3d at 723
8
(internal quotation marks omitted); see also id. at 724 (noting that the Foreign
Sovereign Immunities Act provides the definition of “agency or instrumentality of a
foreign state” (citing 28 U.S.C. § 1603(b))).
Applying these principles to Mr. Caballero’s complaint, we determine that it
did not establish subject-matter jurisdiction under the TRIA. The complaint did not
specifically allege that the defendants are “terrorist parties.” Nor did it allege that
the defendants’ assets are “blocked” as that term is defined in TRIA. As for alleging
that the purported agency or instrumentality is actually an agency or instrumentality,
the complaint included a section defining the defendants’ “agents and
instrumentalities” under the TRIA, and stated that Mr. Caballero intended to execute
on the Florida state-court judgment against the defendants or their agents and
instrumentalities. Aplt. App. Vol. 1, at 12-14.
Mr. Caballero attached the Florida state-court judgment to his complaint. The
Florida state court determined that all three defendants were “narco-terrorist
organization[s],” id. at 19, the defendants’ assets were “‘blocked’ . . . as defined by
TRIA,” id. at 41, and the defendants acted through many “agents and
instrumentalities,” a list of which the Florida court appended to its judgment, id. at
30-31. Thus, it appears that Mr. Caballero may be able to establish federal subject-
matter jurisdiction under the TRIA if he is permitted to amend his complaint.
Consequently, on remand, the district court should permit him the opportunity to
amend the complaint.
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IV. CONCLUSION
The district court’s judgment is reversed and this matter is remanded for
further proceedings consistent with this opinion.
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