Craig HEGNA; Steven Hegna; Lynn Hegna; Paul Hegna; Edwena Hegna, Plaintiffs-Appellants, v. THE ISLAMIC REPUBLIC OF IRAN; The Iranian Ministry Of Information And Security, Defendants-Appellees, and United States Of America, Movant-Appellee.
No. 03-2159
United States Court of Appeals, Fourth Circuit
Decided: July 14, 2004
376 F.3d 226
LUTTIG, Circuit Judge
Argued: May 4, 2004
Lewis Stanley Yelin, Appellate Staff, Civil Division, United States Department of Justice, Washington, D.C., for Appellees.
ON BRIEF: Robert B. Kershaw, Ward, Kershaw & Minton, P.A., Baltimore, Maryland; Barbara J. Radlauer, Dupont & Radlauer, Stamford, Connecticut, for Appellants.
Barbara C. Hammerle, Chief, Foreign Assets Control, Office of the General, United States Department of the Treasury, Washington, D.C.; Mark A. Clodfelter, Lisa J. Grosh, Attorney-Advisers, Office of the Legal Adviser, United States Department of State, Washington, D.C.; Peter D. Keisler, Assistant Attorney General, Thomas M. DiBiagio, United States Attorney, Gregory G. Katsas, Deputy Assistant Attorney General, Douglas N. Letter, H. Thomas Byron, III, Appellate Staff, Civil Division, United States Department of Justice, Washington, D.C., for Appellees.
Before LUTTIG and MICHAEL, Circuit Judges, and Bobby R. BALDOCK, Senior Circuit Judge of the United States Court оf Appeals for the Tenth Circuit, sitting by designation.
Affirmed by published opinion. Judge LUTTIG wrote the opinion, in which Judge MICHAEL and Senior Judge BALDOCK joined.
OPINION
LUTTIG, Circuit Judge:
Appellants, the Hegna family, are judgment-creditors of the Islamic Republic of Iran (“Iran“). Invoking section 201(a) of the newly-enacted Terrorism Risk Insurance Act of 2002 (“TRIA“),
We affirm, though for different reasons than those relied upon by the district court. Regardless of whether the Bethesda properties are subject to execution or attachment under TRIA, we hold that, by accepting a compensatory payment under section 2002 of the Victims of Trafficking and Violence Protection Act of 2000 (“Victims Protection Act“),
On or about December 4, 1984, Charles Hegna was murdered by members of Hezbollah, a terrorist organization with ties to the Islamic Republic of Iran (“Iran“), during that organization‘s hijacking of a Kuwaiti Airlines passenger airplane over the Gulf of Oman.
Until 1996, Hegna‘s wife and children—the appellants in this case—were barred by the Foreign Sovereign Immunities Act (FSIA) from bringing suit against Iran for its role in his murder. See
Congress has devised two avenues by which individuals like the Hegnas—successful plaintiffs in suits brought under section 1605(a)(7)‘s exception to sovereign immunity—may satisfy their judgments against state sponsors of terrorism. First, Congress has subjected an increasingly broad class of property owned by these nations in the United States to execution and attachment in aid of execution. Congress’ latest effort in this regard is embodied in section 201(a) of the TRIA,
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 upon an aсt of terrorism, or for which a terrorist party is not immune under section 1605(a)(7) of title 28, the blocked assets of 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.
Second, in the Victims Protection Act, Congress directed the Secretary of the Treasury to make direct payments to certain judgment-creditors of Iran аnd Cuba from funds belonging to those nations but being held by the United States government. See Victims Protection Act § 2002. As first enacted, the group of individuals eligible to receive these payments under the Act was relatively small and, with five specific exceptions, did not include individuals, such as the Hegnas, who obtained their judgments after July 20, 2000. See
In this case, the Hegna family attempted to satisfy their judgment against Iran by pursuing both avenues of recovery. The Hegnas first sought to recover on their judgment through the exеcution of Iranian properties located in the United States. Relying on the rights given them by section 201(a) of TRIA, the Hegnas obtained writs of attachment upon judgment from the district court in the district of Maryland on two Bethesda, Maryland properties owned by Iran and in the possession of the United States.1 J.A. 11-12 (district court order of December 27, 2002 issuing writs of attachment on both properties). Pursuant to these writs of attachment, a United States marshal levied2 on the Bethesda properties on May 28, 2003, аnd formally executed the writs by filing a return with the clerk‘s office on June 3, 2003, J.A. 2. Butler v. Tilghman, 350 Md. 259, 711 A.2d 859, 864-65 (1998). The district court quashed the writs at the motion of the United States on August 25, 2003, on the ground that the Bethesda properties were not “blocked assets” under TRIA — and therefore not subject to attachment under the Act — because the properties were “being used exclusively for diplomatic... purposes,” TRIA § 201(d)(2)(B)(ii). Hegna v. Islamic Republic of Iran, 287 F.Supp.2d 608, 610 (D.Md.2003).
The Hegnas were not willing to rest on the execution of the Bethesda properties alone, however. In July 2003 — befоre the district court quashed the writs of attachment but after a marshal levied on the Bethesda properties — the Hegnas accepted a pro-rata payment from the United States treasury (represented by the government at argument to exceed $8,000,000) under the Victims Protection Act. See Victims Protection Act § 2002(d)(1)(A) (as amended by TRIA § 201(c)(4)). As required by statute, by their receipt of the pro-rata payment, the Hegnas relinquished, “all rights and claims to punitive damages awarded in conneсtion with” their judgment and, of critical relevance here, “all rights to execute against or attach property that is at issue in claims against the United States before an international tribunal.” See Victims Protection Act § 2002(d)(5)(B) (as amended by TRIA § 201(c)(4)) (emphasis added); Hegna v. Islamic Republic of Iran, 299 F.Supp.2d 229, 230 (S.D.N.Y.2004).
In this appeal, the Hegnas challenge the district court‘s order quashing the writs of attachment on the Bethesda properties. We affirm the district court‘s order without deciding whether the district court erred in holding that the two Bethesda properties are not “blocked assets” under section 201(d)(2)(B)(ii) of TRIA. Even assuming the Bethesda properties are “blocked assets” and therefore subject to execution and attachment in aid of such execution under TRIA, we conclude that the properties may not be executed against or attached by the Hegnas because the Hegnas have relinquished any right they previously possessed to force the sale of the Bethesda properties in satisfaction of their judgment.3
The Hegnas vigorously resist this conclusion. First and foremost, they argue that their relinquishment has no application to the judicial sale of the Bethesda properties because, at the time of the relinquishment, the marshal had already levied on the Bethesda properties.4 After a levy, the Hegnas argue, a property is formally “attached” and, as a consequence, placed “in custodia legis” (in the custody of the court). Thereafter, in the Hegnas’ view, the judgment creditor has no rights of execution or attachment remaining, prior to the judicial sale of the property in satisfaction of his judgment.
We cannot agree. By their receipt of a payment from the United States treasury, the Hegnas relinquished ”all rights to execute against or attach” certain properties. See Victims Protection Act § 2002(d)(5) (as amended by TRIA § 201(c)). These rights include not only the rights that the Hegnas had already exercised at the time of relinquishment, the rights to obtain a writ of attachment on judgment and to have a marshal levy against the property under that writ, but also rights of “execution” that the Hegnas had not yet exercised, such as the rights to proceed under that writ of attachment on judgment and, eventually, to have the property sold by the marshals and to receive the proceeds of that sale. See Thomas D. Crandall et al., 1 The Law of Debtors and Creditors § 6:50 (2004) (explaining that “the final step of the execution process involves the sale of the property levied upon“). Thus, while the marshal‘s levy on the Bethesda properties represented an important step in the Hegnas’ execution of those properties, it did not exhaust the Hegnas’ bundle of rights “to execute against” the properties because it did not complete the sale of the properties in satisfaction of the Hegnas’ judgment.
The procedures that govern both the execution of judgments, and the processes in aid of execution, such as the writ of attachment on judgment issued by the district court in this case, are dictated by the state in which the district court is located.
Under Maryland law, an attachment on judgment is a form of execution, allowing “a judgment creditor [to] reach the assets of a judgment debtor in the hands of a third party.” Northwestern National Ins. Co. v. William G. Wetherall, Inc., 267 Md. 378, 298 A.2d 1, 5 (1972); Steed Mortgage Co. v. Arthur, 37 Md.App. 592, 378 A.2d 690, 694 (1977); see
In sum, at any point until the marshal‘s sale of a property, we conclude that, under Maryland law, the judgment creditor can be said to possess rights “to execute against” the property. Yet, at the time the Hegnas relinquished their еxisting rights “to execute against” the Bethesda properties, they had not undertaken the final stage of execution by securing either a judgment of condemnation absolute or a writ of execution on the properties. We hold that their relinquishment bars them from proceeding with any effort to do so now.
Accordingly, so long as the Bethesda properties are within the scope of the relinquishment and the Hegnas have received a payment from the Treasury sufficient to trigger thеir relinquishment, their relinquishment of rights requires that the writs of attachment executed on the properties be quashed. We address these issues in turn.
The Hegnas’ relinquishment of rights did not extend to all Iranian properties in the United States, but only to those “at issue in claims against the United States before an international tribunal.” Thus, we must determine whether the Bethesda properties fall within this class of properties. We have no difficulty deciding that they do. In 1982, Iran filed claims against the United States in the Iran-U.S. Claims Tribunal (“Claims Tribunаl“) alleging that the “United States has breached its obligations under the Algiers Declarations by failing to grant Iran custody of its diplomatic and consular properties in the United States.” See Islamic Republic of Iran v. United States of America, No. DEC129-A4/A7/A15 (I:F & III), 33 Iran-U.S. Cl. Tr. Rep. 362 ¶ 1 (1997). The Bethesda properties are former Iranian diplomatic properties, J.A. 35 (declaration of Francis X. Taylor), and, therefore, “at issue” in these claims. The Claims Tribunal has postponed hearing on Iran‘s claims in order to allow the two nations to settle their dispute, but, as the Hegnas сoncede, the claims remain pending before the tribunal. Thus, it would appear rather straightforward that the Bethesda properties fall within the contours of the Hegnas’ relinquishment.
The Hegnas argue, nevertheless, that the Bethesda properties are not “at issue ... before” the Iran-U.S. Claims Tribunal because it has not yet been established that the tribunal has “subject matter jurisdiction” over the claims. As an initial matter, the Hegnas have offered no evidence to support their claim that the United States contests the jurisdiction of the Claims Tribunal to consider Iran‘s claims, and the decisions rendered by the Claims Tribunal thus far fail to so much as hint that its jurisdiction has been challenged. To the contrary, the Claims Tribunal has provided that, “[t]he final determination of the rights to [the diplomatic and consular properties] will be made in due course, either by the Parties themselves in the settlement process or by the Tribunal if the Parties fail to reach a settlement.” Id. at ¶ 10; see also id. at ¶ 12 (explaining that the “Tribunal‘s jurisdiction to determine these claims will not be prejudiced if [Iran‘s] present request is not granted“). In any event, even if the jurisdiction of the Claims Tribunal to hear Iran‘s claims regarding its diplomatic and consular properties in the United States was in dispute and yet undecided, the Hegnas’ argument could still not be sustained. The Claims Tribunal‘s consideration of its jurisdiction would not change the fact that the Bethesda properties are “at issue” in Iran‘s claims, nor would it mean that Iran‘s claims are no longer “before” the Iran-U.S. Claims Tribunal. As was recently explаined in rejection of an identical argument, “a jurisdictional issue is still an issue, and until and unless the Tribunal determines it lacks jurisdiction over Iran‘s claim to the property, the property is ‘at issue’ before the Tribunal.” Hegna v. Islamic Republic of Iran, 299 F.Supp.2d 229, 230 (S.D.N.Y.2004).
Finally, the Hegnas argue that section 2002(d)(5) of the Victims Protection Act does not require them to relinquish their rights until they have received the full amount to which they are entitled under section 2002(d)(1) of the Act. This argument too is unavailing. Section 2002(d)(5) states that, ”any persons receiving less than the full amount of compensatory damages awarded to that party in a judgment ... shall be required to relinquish rights set forth” in sections 2002(a)(2)(C) and (D). Victims Protection Act § 2002(d)(5). We see no reason to read this statutory provision to mean anything other than what it says: whenever an eligible judgment creditor of either Iran or Cuba receives a payment of “less than the full amount of compensatory damages” from the Treasury under section 2002(d), he must relinquish the rights described in the Act. It is uncontested that the Hegnas have recеived such a payment here, and, therefore, by operation of statute, they have relinquished their rights to punitive damages and “to execute against or attach” certain properties. Accord Hegna, 299 F.Supp.2d at 230. It may be that the Hegnas ultimately are entitled to more under the Victims Protection Act than they have received thus far (the record is barren on this account), but, even assuming that they are, such a grievance does not provide a defense to the relinquishment effected by their receipt of a smaller payment.
III.
In summary, by their receipt of a payment “less than the full amount of [their] compensatory damages award,” the Hegnas relinquished “all rights to execute against or attach” the Bethesda properties, on which they had caused a writ of attachment on judgment to be levied. We hold that their relinquishment prohibits them from taking the additional steps necessary to complete the execution of the properties in satisfaction of their judgment against Iran. The order of the district court quashing the Hegnas’ writs of attachment in aid of such execution is accordingly affirmed.
AFFIRMED