946 F.3d 120
2d Cir.2019Background
- Three U.S. judgment creditors (Vera, the Villoldos, and Hausler) obtained large default judgments in Florida state courts against the Republic of Cuba for alleged torture and extrajudicial killing dating mainly from 1959–1960.
- The creditors sought to enforce those Florida judgments in the S.D.N.Y. by a joint Omnibus Turnover Petition to seize Cuban blocked assets held by multiple banks, including BBVA; the District Court granted turnover orders and disbursed funds (deposited in the Court Registry) to the creditors.
- BBVA challenged the District Court’s subject‑matter jurisdiction under the FSIA and TRIA, arguing the court could not rely solely on the Florida courts’ default‑judgment findings to establish FSIA’s state‑sponsor‑of‑terrorism exception (28 U.S.C. § 1605A) required by TRIA § 201(a).
- The second circuit previously held (Vera III) that a federal court must independently determine FSIA jurisdiction when enforcement rests on a foreign sovereign’s default judgment; state‑court findings do not bind that federal inquiry.
- On de novo review of the record here, the Court concluded Petitioners failed to show (a) Cuba’s 1982 designation was made “as a result of” the pre‑1982 acts underlying the Florida judgments, or (b) that the alleged wrongful acts occurred after 1982; accordingly TRIA § 201(a) did not supply enforcement jurisdiction.
- Holding the turnover orders void for lack of jurisdiction, the Second Circuit reversed, vacated the turnover orders, remanded with instructions to dismiss for lack of subject‑matter jurisdiction, and ordered restitution of funds to BBVA.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the District Court had jurisdiction under TRIA § 201(a) / FSIA § 1605A to enforce Florida default judgments | Florida judgments establish liability and the state‑sponsored‑terrorism exception; TRIA authorizes turnover | Federal court must independently determine FSIA jurisdiction; state default judgments where sovereign did not appear do not establish the required statutory link | No jurisdiction: Petitioners failed to show the 1982 designation was tied to the pre‑1982 acts or that qualifying acts occurred post‑1982 |
| Whether the District Court could rely on Florida courts’ jurisdictional findings (full faith and credit) | Full faith and credit requires federal enforcement of state judgments and their jurisdictional findings | Default judgments against a nonappearing sovereign were not fully and fairly litigated; federal courts must apply FSIA standards de novo | District Court erred in relying on Florida findings; it must independently assess FSIA jurisdiction |
| Whether the Villoldos proved post‑1982 acts (torture/other enumerated acts) sufficient under § 1605A | Post‑1982 threats, assassination attempts, and harassment constitute torture or other § 1605A acts supporting enforcement | TVPA definition of torture requires custody/physical control and severe suffering; alleged incidents are legally insufficient | Allegations do not meet the statutory/TVPA definition of torture or other enumerated acts after 1982; inadequate to confer jurisdiction |
| Whether funds obtained by Appellees under the void turnover orders must be returned to BBVA (restitution) | Appellees: BBVA lacks possessory interest; funds belong to Cuban entity; restitution improper | BBVA: reversal of void orders entitles it to restoration; unjust enrichment occurred | Restitution ordered: equity requires Appellees (and Vera) to return funds collected under jurisdictionally void turnover orders |
Key Cases Cited
- Verlinden B.V. v. Cent. Bank of Nigeria, 461 U.S. 480 (1983) (FSIA is the exclusive basis for jurisdiction over foreign states)
- Argentine Republic v. Amerada Hess Shipping Corp., 488 U.S. 428 (1989) (FSIA governs subject‑matter jurisdiction over foreign sovereigns)
- Vera v. Republic of Cuba, 867 F.3d 310 (2d Cir. 2017) (Vera III) (federal courts must independently determine FSIA jurisdiction when default judgments against a foreign state are relied on)
- Rubin v. Islamic Republic of Iran, 138 S. Ct. 816 (2018) (§ 1610(g) does not by itself provide a freestanding basis to attach foreign‑state property)
- Transatlantic Marine Claims Agency, Inc. v. Ace Shipping Corp., 109 F.3d 105 (2d Cir. 1997) (default judgment principles and inquiry into jurisdictional voidness)
- LiButti v. United States, 178 F.3d 114 (2d Cir. 1999) (rule permitting restoration to a party harmed by an erroneous judgment and restitution principles)
- Calderon‑Cardona v. Bank of N.Y. Mellon, 770 F.3d 993 (2d Cir. 2014) (ownership interest required for attaching blocked EFTs)