Michael Bennett v. Bank Melli
799 F.3d 1281
9th Cir.2015Background
- Four groups of judgment creditors (Bennett, Greenbaum, Acosta, Heiser) hold valid default judgments against Iran for state‑sponsored terrorist attacks totaling hundreds of millions of dollars.
- Congress enacted TRIA §201 (2002) and 28 U.S.C. §1610(g) (2008) to permit execution/attachment of blocked or other property of terrorist states and their agencies/instrumentalities to satisfy such judgments.
- In 2007 the U.S. Treasury blocked certain Iranian‑related assets in the U.S.; Visa and Franklin held $17.6 million owed to Iran/Bank Melli and interpleaded the funds into court.
- Bank Melli (an Iranian state bank) appeared and moved to dismiss, arguing immunity under the FSIA/TRIA, indispensability under FRCP 19, retroactivity, and lack of ownership of the blocked funds.
- The district court denied dismissal; the Ninth Circuit reviewed de novo and affirmed, holding TRIA and §1610(g) abrogate asset immunity of instrumentalities and that the collection action could proceed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether TRIA §201/§1610(g) abrogate asset immunity of separate instrumentalities | Creditors: statutes expressly reach any agency or instrumentality and permit attachment of their assets | Bank Melli: Bancec requires alter‑ego relationship; instrumentalities separate from state remain immune | Held: TRIA and §1610(g) clearly abrogate immunity for all instrumentalities, even separate juridical entities; Bancec exceptions disclaimed by statute |
| Whether FRCP 19 requires dismissal because Bank Melli is an indispensable party | Creditors: Bank Melli is not indispensable; this is a collection proceeding and Iran (the debtor) already had its day in court | Bank Melli: Pimentel requires dismissal where absent sovereign’s interests may be harmed | Held: Pimentel inapplicable; Bank Melli is not indispensable and may be joined; dismissal would frustrate statutes’ purposes |
| Whether application of TRIA/§1610(g) to pre‑enactment judgments is impermissible retroactive application | Creditors: statutes are procedural collection remedies, not new retroactive liabilities | Bank Melli: statutes impose liability after the fact and increase past liability | Held: No impermissible retroactivity—liability was already established under §1605A; collection mechanisms do not impose new liability |
| Whether the blocked funds are "owned" by Bank Melli for attachment | Creditors: under controlling Ninth Circuit precedent and state enforcement law, rights to payment owed to Bank Melli suffice | Bank Melli: funds are possessed by intermediaries (Visa/Franklin) and thus not yet owned by Bank Melli | Held: Ownership determined by applicable state enforcement law; beneficial/owed interest is sufficient—Bank Melli’s lack of physical possession is immaterial |
Key Cases Cited
- First Nat’l City Bank v. Banco Para El Comercio Exterior de Cuba, 462 U.S. 611 (Bancec: separate juridical status of instrumentalities ordinarily respected)
- United States v. Gonzales, 520 U.S. 1 (statutory use of “any” construed expansively)
- Clark v. Rameker, 134 S. Ct. 2242 (statutes should be construed to give effect to all provisions)
- Republic of Philippines v. Pimentel, 553 U.S. 851 (indispensable‑party considerations when sovereign immunity asserted)
- Landgraf v. USI Film Prods., 511 U.S. 244 (test for retroactive application of statutes)
- Breard v. Greene, 523 U.S. 371 (later federal law can supersede earlier treaty rights where text is clear)
- Weinstein v. Islamic Republic of Iran, 609 F.3d 43 (TRIA gives jurisdiction to execute against property held by instrumentalities not named in judgment)
- Peterson v. Islamic Republic of Iran, 627 F.3d 1117 (federal enforcement governed by state law; assignment of rights to payment)
- Flatow v. Islamic Republic of Iran, 308 F.3d 1065 (discussion of factors used in alter‑ego analysis)