Hausler v. JP Morgan Chase Bank, N.A.
127 F. Supp. 3d 17
S.D.N.Y.2015Background
- Hausler, as personal representative of Robert Fuller’s estate, holds a Florida default judgment for $100,000,000 (compensatory) against Cuba and Cuban officials for torture/extrajudicial killing and seeks turnover of funds blocked under the Cuban Asset Control Regulations (CACRs) pursuant to TRIA.
- JPMorgan Chase (JPM Chase) holds three blocked accounts in New York in the name of Fundacion Benefica Nicolas S. Acea (the Fundacion); Hausler filed a Tranche VI turnover petition targeting those accounts and JPM Chase filed an interpleader third-party petition naming the Fundacion and three individuals as trustees.
- The three individuals (Fundacion Trustees) long claimed to represent the Fundacion, but in separate Florida supplementary proceedings (Villoldo), they admitted they were not trustees of the Cuban Fundacion and that the Fundacion had been nationalized by the Cuban government; the Florida court entered an order to that effect.
- On that basis the Southern District of New York court found the Trustees judicially estopped from claiming to be Fundacion trustees, struck their interpleader answer, allowed their counsel to withdraw, denied JPM’s request to amend interpleader to locate other representatives, and denied requests to stay or hold a pre-motion conference.
- The court concluded (subject to limited further submissions about service/notice to the Fundacion) that (1) the Fundacion was nationalized; (2) recognition of the extraterritorial confiscation of assets located in the U.S. was consistent with U.S. policy (following Chemical Bank I), and (3) Hausler may execute on the blocked accounts under TRIA if no legitimate Fundacion representative timely appears.
Issues
| Issue | Plaintiff's Argument (Hausler) | Defendant's Argument (Fundacion/JPM) | Held |
|---|---|---|---|
| Whether Fundacion Trustees have standing to assert interest in the blocked accounts | Trustees claim they represent the Fundacion and thus assert ownership/defense | Trustees (and their counsel) later conceded in Florida they are not trustees and represent a separate U.S. foundation; JPM questioned evidentiary basis but sought to preserve interpleader | Trustees are judicially estopped and lack standing; their interpleader answer struck and counsel allowed to withdraw |
| Whether interpleader by JPM Chase is appropriate as to Trustees and the Fundacion | JPM: fear of multiple liability justifies interpleader against trustees and Fundacion | Hausler: trustees lack standing so interpleader as to trustees is baseless; JPM argues Fundacion itself may still have claim and service may be defective | Interpleader denied as to the three Trustees (no real threat); court reserved decision re: Fundacion and ordered limited notice submissions to locate any legitimate Fundacion representative |
| Whether the Fundacion was nationalized and whether blocked assets are "assets of that terrorist party" under TRIA | Hausler: Fundacion was nationalized; its assets therefore are Cuban assets and are TRIA-executable | Fundacion originally disputed recognition; JPM urged fuller factual/papered consideration before turnover and questioned evidentiary record | Court found the Fundacion was nationalized (crediting public record, admissions, and expert affidavit) and that recognizing the extraterritorial taking is consistent with U.S. policy; assets can qualify as TRIA assets, subject to further limited submissions |
| Whether OFAC is a necessary party or whether its absence requires dismissal | Fundacion argued OFAC must join because it administers CACRs | Hausler and court: OFAC not necessary and has not intervened; administrative remedies exist for mistaken blocks | OFAC is not a necessary party; Tranche VI may proceed without OFAC |
Key Cases Cited
- New Hampshire v. Maine, 532 U.S. 742 (2001) (judicial estoppel is equitable and flexible)
- Robinson v. Concentra Health Servs., 781 F.3d 42 (2d Cir. 2015) (judicial estoppel framework)
- Calderon-Cardona v. Bank of New York Mellon, 770 F.3d 993 (2d Cir. 2014) (state law defines property interests for TRIA/FSIA questions)
- Hausler v. JPMorgan Chase Bank, N.A., 770 F.3d 207 (2d Cir. 2014) (TRIA does not preempt state law; instructs to look to state property law)
- Banco Nacional de Cuba v. Chemical Bank New York Trust Co., 658 F.2d 903 (2d Cir. 1981) (recognition of extraterritorial Cuban nationalizations may be appropriate where recognition advances U.S. policy)
- Republic of Iraq v. First Nat’l City Bank, 353 F.2d 47 (2d Cir. 1965) (act of state doctrine does not bar inquiry into extraterritorial takings of U.S.-located property; recognition must be consistent with U.S. law/policy)
- Bandes v. Harlow & Jones, 852 F.2d 661 (2d Cir. 1988) (distinguishable case declining to enforce an extraterritorial confiscation under facts where recognition would be inconsistent with justice/policy)
- Sabbatino v. United States, 376 U.S. 398 (1964) (act of state doctrine and its limits)
- Weininger v. Castro, 462 F. Supp. 2d 457 (S.D.N.Y. 2006) (procedure of addressing TRIA executability before interpleader in prior related litigation)