12-1264 (L)
Hausler et al., v. JPMorgan Chase Bank, N.A., et al.
UNITED STATES COURT OF APPEALS
FOR THE SECOND CIRCUIT
_____________________
AUGUST TERM, 2012
(ARGUED: FEBRUARY 11, 2013 DECIDED: OCTOBER 27, 2014)
Docket Nos. 12-1264 (Lead), 12-1272 (Con), 12-1384 (Con), 12-1386 (Con), 13-1463 (Con),
12-1466 (Con), 12-1945 (Con)
_____________________
JEANNETTE FULLER HAUSLER, as Successor Personal Representative of THE ESTATE OF
ROBERT OTIS FULLER, Deceased, on behalf of THOMAS CASKEY as Personal
Representative of THE ESTATE OF LYNITA FULLER CASKEY surviving daughter of
ROBERT OTIS FULLER, and JEANNETTE HAUSLER,
Plaintiff - Third-Party Defendants - Appellees,
ESTATE OF ROBERT OTIS FULLER, FREDERICK FULLER, GRACE LUTES, IRENE
MOSS, and FRANCES FULLER,
Plaintiffs - Third-Party Defendants,
v.
JP MORGAN CHASE BANK, N.A., CITIBANK, N.A., ROYAL BANK OF SCOTLAND
N.V., FKA ABN AMRO BANK N.V., BANK OF AMERICA CORPORATION, UBS AG, and
BANK OF AMERICA N.A.,
Defendants - Garnishees - Third-Party Plaintiffs - Appellees,
DRESDNER LATEINAMERIKA AG, FKA DRESDNER BANK LATEINAMERIKA AG,
ABBOTT LABORATORIES, INC., PETROLEOS DE VENEZUELA, S.A., FUNDACION
BENFICA NICOLAS S. ACEA, PABLO ALCAZAR, as trustee of FUNDACION BENEFICA
NICOLAS S. ACEA, MAYRA BUSTAMENTS, and RENE SILVA, JR., as trustee of
FUNDACION BENEFICA NICOLAS S. ACEA,
Third-Party Defendants,
REPUBLIC OF CUBA, FIDEL CASTRO RUZ, Individually, As First Vice President of the
Council of State and Council of Ministers and Head of the Cuban Revolutionary Armed Forces,
Cuban Revolutionary Armed Forces, El Ministerio Del Interior,
1
Defendants – Third-Party Defendants,
v.
LTU LUFTTRANSPORTUNTERNEHMEN, LTU GMBH IN CARE OF KIRSTEIN &
YOUNG PLLC 1750 K STREET NW, SUITE 200 WASHINGTON, DC 20006,
Consolidated - Third-Party Defendant - Appellant,
BANCO BILBAO VIZCAYA ARGENTARIA, S.A., BANCO BILBAO VIZCAYA
ARGENTARIA PANAMA, S.A.,
Claimants - Appellants,
ESTUDIOS MERCADOS Y SUMINISTROS, S.L., PHILIPS MEXICANA S.A. DE C.V.,
NOVAFIN FINANCIERE, S.A.,
Respondents - Appellants,
CAJA DE AHORROS Y MONTE DE PIEDAD DE MADRID, PREMUDA S.P.A.,
Interpleaders - Appellants,
SHANGHAI PUDONG DEVELOPMENT BANK CO. LTD.
Third-Party Defendant - Appellant,
AEROFLOT RUSSIAN AIRLINES,
ADR Provider - Appellant,
BANCO SANTANDER S.A., CAJA MADRID, BANCO ESPANOL DE CREDITO, BANCO
SANTANDER TOTTA, S.A., UNION BANCAIRE PRIVEE, BANCO CENTRAL DE
VENEZUELA, and BANCO DE DESARROLLO ECONOMICO Y SOCIAL DE
VENEZUELA,
Respondents,
SAN PAOLO BANK S.A. and ING BANK N.V.,
Claimants.
Before: HALL, LYNCH, AND CARNEY, Circuit Judges.
_______________________
The Clerk of Court is respectfully directed to amend the caption to conform to that above.
2
At issue in this case is whether § 201 of the Terrorism Risk Insurance Act of 2002
permits attachment of blocked electronic funds transfers. Because none of the transfers in this
case were sent directly from the terrorist party or its agents or instrumentalities to the blocking
bank, the judgment of the United States District Court for the Southern District of New York
permitting attachment (Marrero, J.) is hereby REVERSED.
_______________________
DAVID ALAN BARON, JAMES WILSON PERKINS,
ROBERT PHILLIP CHARROW, and LAURA METCOFF
KLAUS, Greenberg Traurig, LLP, Washington, D.C.
for Jeannette Hausler, Estate of Robert Otis Fuller,
Frederick Fuller, Grace Lutes, Irene Moss, and
Frances Fuller
JUANCARLOS SANCHEZ, ESQ. AND WILFREDO A.
RODRIGUEZ, Avila Rodriguez Hernandez Mena &
Ferri LLP, Coral Gables, Florida for Banco
Santander, S.A., Caja Madrid, Caja de Ahorros y
Monte do Piedad de Madrid, and Caja Madrid
BERNARD JAMES GARBUTT, III, Morgan, Lewis &
Bockius LLP, New York, New York for Banco
Espanol De Credito, Banco Santander Totta, S.A.,
Union Bancaire Privee, Banco Central de
Venezuela, Banco de Desarrollo Economico y
Social de Venezuela, Estudios Mercados y
Suministros, S.L., and Philips Mexicana S.A. de
C.V.
MATTHEW BELZ, KENNETH CARUSO, AND GLENN M.
KURTZ, White & Case LLP, New York, New York
for Banco Bilbao Vizcaya Argentina Panama, S.A.,
Banco Bilbao Vizcaya Argentaria, S.A., and
Shanghai Pudong Development Bank Co. Ltd.
JAMES L. KERR AND KAREN E. WAGNER, Davis Polk
& Wardwell LLP, New York, New York for San
Paolo Bank, S.A., ING Bank, N.V., JPMorgan
Chase Bank, N.A., Citibank, N.A., The Royal Bank
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of Scotland N.V., Bank of America, Corp., UBS AG,
and Bank of America N.A.
DAVID MICHAEL KIRSTEIN, Kirstein & Young PLLC,
Washington, DC, for LTU Luftransport-
Unternehmen, LTU Gmbh In Care of Kirstein &
Young PLLC
CLAURISSE CAMPANALE-OROZCO, Tisdale Law
Offices, LLC, New York, New York for Premuda
S.p.A.
DAVID S. JONES, United States Attorney’s Office for
the Southern District of New York, New York, New
York, for the United States of America.
_______________________
Per Curiam:
Before us on appeal is a matter of first impression regarding the interpretation of
§ 201 of the Terrorism Risk Insurance Act of 2002 (codified at 28 U.S.C. § 1610 note)
(“TRIA”). The plaintiffs-appellees (collectively “Hausler”) are family members or trustees of
the estates of victims of state-sponsored terrorism. They seek to enforce their 2009 Florida state
court judgment (“the underlying judgment”) obtained against, among others, the Republic of
Cuba (“Cuba”) by attaching the blocked assets of that state pursuant to TRIA § 201.
Specifically, Hausler seeks to satisfy the underlying judgment from electronic fund transfers
(“EFTs”) blocked pursuant to the Cuban Assets Control Regulations, 31 C.F.R. Part 515.1 The
defendant-garnishee banks at which the EFTs are stopped pursuant to the block oppose turning
over the value of the EFTs. The dispositive questions are whether and under what factual
circumstances TRIA permits the attachment of mid-stream EFTs.
1
For a detailed explanation of how EFTs function, see Shipping Corp. of India Ltd.v. Jaldhi Overseas Pte Ltd., 585
F.3d 58, 60 n.1 (2d Cir. 2009).
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BACKGROUND
A. Underlying Judgment
The appellees are family members and estate representatives of Bobby Fuller, an
American citizen who was arrested and executed by Cuban government forces on October 16,
1960. In 2005, the Hausler plaintiffs sued Cuba and others under the Foreign Sovereign
Immunities Act, 28 U.S.C. § 1602 et seq., in the Eleventh Judicial District, Miami-Dade County,
Florida. Cuba did not appear and after conducting a hearing, the Florida state court awarded the
Hausler plaintiffs $400,000,000 in combined compensatory and punitive damages. Cuba did not
appeal this judgment. The judgment remains unsatisfied.
Since March 1, 1982, Cuba has been continuously designated as a state sponsor of
terrorism under section 6(j) of the Export Administration Act of 1979 by the United States
Department of State.
B. Judgment Collection and Proceedings Before the District Court
To enforce the judgment, Hausler sought in the Florida state courts writs of garnishment
on United States companies which, according to Hausler, were indebted to Cuba. The garnishees
removed the garnishment proceedings to the United States District Court for the Southern
District of Florida, arguing that federal subject matter jurisdiction existed under 28 U.S.C. §§
1330, 1332, and TRIA.
In a parallel action, Hausler sought a full faith and credit determination for the underlying
state judgment in the United States District Court for the Southern District of Florida. That
request was granted on August 20, 2008. The judgment was then registered in the United States
District Court for the Southern District of New York, and Hausler commenced additional
collection proceedings in that court. The Florida garnishment actions were (1) ultimately
transferred to the Southern District of New York and consolidated with the actions there or (2)
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dismissed without prejudice to be pursued in the Southern District of New York along with the
transferred and consolidated actions.
On July 6, 2010, Hausler filed three petitions (hereinafter petitions I, II, and III) under
Fed. R. Civ. P. 69 and N.Y. C.P.L.R. § 5225(b) against the defendant-garnishee banks to turn
over the value of the EFTs at issue in this case. The garnishee banks moved to dismiss turnover
petition III, arguing, among other things, that Cuba had no property interest in the EFTs. The
district court denied the motion, holding that TRIA preempted state law with respect to which
entities had a property interest in mid-stream EFTs and that Cuba had a sufficient property
interest in the EFTs for Hausler to execute upon them. The banks then commenced an
interpleader action regarding Petitions I and III. Numerous adverse claimant respondents
appeared (collectively “the ACRs”), each claiming to have an interest in the blocked EFTs
superior to Hausler’s. Hausler then moved for judgment on the pleadings or, in the alternative,
summary judgment regarding Petitions I and III. The garnishee banks and ACRs cross-moved
for summary judgment. The district court granted summary judgment in favor of Hausler for
essentially the same reasons given in its earlier decision.2 This appeal followed.
DISCUSSION
On appeal the garnishee-banks and ACRs argue that the blocked EFTs are not attachable
“assets of” Cuba under TRIA § 201. We review de novo the “threshold issue of whether EFTs
are . . . property” of a particular party. Calderon-Cardona v. JPMorgan Chase Bank, N.A., No.
12-0075, slip op. at 12 (2d Cir. Oct. 23, 2014) (quoting Shipping Corp. of India Ltd. v. Jaldhi
Overseas Pte Ltd., 585 F.3d 58, 66–67 (2d Cir. 2009)).
2
Judge Marrero also ruled on the priority of claims between the ACRs and Hausler. However, because this case can
be resolved on the basis of whether the funds can be attached under TRIA at all, we do not reach those issues.
6
In the ordinary case, a foreign state will be “immune from the jurisdiction of the courts of
the United States and of the States” pursuant to the Foreign Sovereign Immunities Act (“FSIA”).
28 U.S.C. § 1604 (1988). Congress, however, has created terrorism-related exceptions to
immunity under FSIA. See Calderon-Cardona, slip op. at 7. One such exception is TRIA’s
authorization of the attachment of the property of terrorist parties and that of their agencies or
instrumentalities to satisfy certain judgments issued against them. See TRIA § 201(a). In
particular, TRIA provides that:
Notwithstanding any other provision of law, and except as provided in subsection (b), in
every case in which a person has obtained a judgment against a terrorist party on a claim
based on an act of terrorism, or for which a terrorist party is not immune under [28
U.S.C. § 1605(a)(7)], 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 the 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.
TRIA § 201(a) (emphasis supplied).
“[W]hether or not midstream EFTs may be attached or seized depends upon the nature
and wording of the statute pursuant to which attachment and seizure is sought.” Export-Import
Bank of U.S. v. Asia Pulp & Paper Co., 609 F.3d 111, 116 (2d Cir. 2010). As with FSIA §
1610(g), Congress did not define the “type of property interests that may be subject to
attachment under” TRIA § 201(a). Calderon-Cardona, slip op. at 12 (interpreting FSIA §
1610(g)). While the Cuban Assets Control Regulations, for purposes of those regulations,
include a non-exhaustive list of types of property that may be attached, 31 C.F.R. § 515.311(a),
EFTs involving a Cuban bank are not among the types of property identified. When Congress
leaves a gap in a statute that “has not created any new property rights, but ‘merely attaches
consequences, federally defined, to rights created under state law,’ we must look to state law to
define the ‘rights the judgment debtor has in the property the [creditor] seeks to reach.’”
7
Calderon-Cardona, slip op. at 12–13 (quoting Asia Pulp, 609 F.3d at 117). Here, the banks at
which the EFTs are blocked are in New York, so we look to New York property law to fill the
gap.
We recently explained in Calderon-Cardona “that under New York law ‘EFTs are
neither the property of the originator nor the beneficiary while briefly in the possession of an
intermediary bank.’” Id. at 13 (quoting Jaldhi, 585 F.3d at 71). As such, “the only entity with a
property interest in the stopped EFT is the entity that passed the EFT on to the bank where it
presently rests.” Id. at 14. Thus, in order for an EFT to be a “blocked asset of” Cuba under
TRIA § 201(a), either Cuba “itself or an agency or instrumentality thereof (such as a state-owned
financial institution) [must have] transmitted the EFT directly to the bank where the EFT is held
pursuant to the block.” Id.
Unlike in Calderon-Cardona, where a remand was necessary to determine whether the
EFTs at issue were attachable, it is undisputed that no Cuban entity transmitted any of the
blocked EFTs in this case directly to the blocking bank. As a result, neither Cuba nor its agents
or instrumentalities have any property interest in the EFTs that are blocked at the garnishee
banks. Because no terrorist party or agency or instrumentality thereof has a property interest in
the EFTs, they are not attachable under TRIA § 201.
CONCLUSION
We have reviewed the parties’ additional arguments and find them unavailing. In light of
the foregoing analysis, the judgment of the District Court is REVERSED, and the case is
REMANDED for further proceedings consistent with this opinion.
8