Edwena A. HEGNA, individually and as executor of the Estate of Charles Hegna, deceased, Craig Hegna, Steven Hegna, et al., Plaintiffs-Appellants, v. ISLAMIC REPUBLIC OF IRAN and Iranian Ministry of Information and Security, Defendants, and United States of America, Movant-Appellee.
No. 03-4294
United States Court of Appeals, Seventh Circuit
Argued May 27, 2004. Decided August 11, 2004.
380 F.3d 1000
Ralph P. Dupont (argued), Dupont & Radlauer, Stamford, CT, for Plaintiff-Appellant.
H. Thomas Byron, III (argued), Washington, DC, for Movant-Appellee.
Before FLAUM, Chief Judge, and MANION and KANNE, Circuit Judges.
FLAUM, Chief Judge.
Edwena A. Hegna, Craig Hegna, Lynn Marie Hegna Moore and Paul Hegna, the plaintiffs-appellants, are the wife and children of Charles Hegna, an American who was murdered during a 1984 terrorist hijacking of a Kuwaiti Airlines flight. The hijacking was undertaken by Hezbollah, a terrorist group sponsored by the Islamic Republic of Iran and the Iranian Ministry of Information and Security (collectively “Iran“). The appellants brought suit under
I. Background
In 1996, as part of the Antiterrorism and Effective Death Penalty Act (“AEDPA“), Congress amended the Federal Sovereign Immunities Act (“FSIA“) to create an exception to sovereign immunity for state-sponsored terrorist acts. See
On December 4, 1984, members of the aforementioned Hezbollah hijacked a Kuwaiti Airways aircraft bound for Pakistan. One of the passengers on the plane was Charles Hegna, an American citizen employed by the United States Agency for International Development. The terrorists ultimately forced the pilot to land at Iran‘s Tehran airport. Thereafter, the terrorists fatally shot Mr. Hegna and threw his body from the plane.
Mr. Hegna‘s wife and children brought suit against Iran in April 2000 under
Until November 2002, the Hegnas had no means for enforcing the judgment against Iran. At that time, Congress enacted § 201 of the Terrorism Risk Insurance Act of 2002 (“TRIA“), Pub.L. No. 107-297, § 201, 116 Stat. 2,322, 2,337 (codified at
Notwithstanding any other provision of law, and except as provided in subsection (b) [of this note], in every case in which a person has obtained a judgment against a terrorist party on a claim based upon an act of terrorism, or for which a terrorist party is not immune under section 1605(a)(7) of title 28, United States Code, 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 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.
Five years prior to Mr. Hegna‘s murder, President Carter had responded to the 1979 Iran hostage crisis by issuing Executive Order 12170 pursuant to the International Emergency Economic Powers Act,
Invoking TRIA § 201(a), the Hegnas sought to recover on their § 1605(a)(7) judgment by executing against and attaching certain blocked properties of Iran, including the Chicago properties.2 Prior to the 1980 severance of consular relations between the United States in Iran, the Chicago properties had been used as residences by employees of the Consulate of Iran. The Hegnas obtained writs of attachment on January 21, 2003 from the United States District Court for the Northern District of Illinois seeking the levy and sale or turnover of the Chicago properties.3 Iran did not appear to defend the action.
In addition to pursuing attachment and execution of the Chicago properties in aid of execution of their judgment, the Hegnas also pursued relief under the Victims of Trafficking and Violence Protection Act (“VTVPA“), Pub.L. No. 106-386, § 2002(a)(2)(A), 114 Stat. 1,464, 1,542 (2002), amended by TRIA § 201(c)(1). Section 2002 authorized the Secretary of the Treasury to buy judgments from judgment-creditors of Iran and Cuba. These payments by the United States were intended to provide judgment-creditors an alternative to enforcing their § 1605(a)(7) judgments against Iran. VTVPA § 2002(a) provided judgment-creditors the option of collecting either 110 percent or 100 percent of the amount of compensatory damages that they had been awarded on a § 1605(a)(7) claim, in exchange for the relinquishment of certain rights to enforce their judgments. All judgment-creditors who collected payment under § 2002 had to “relinquish[ ] all claims and rights to compensatory damages and amounts awarded as judicial sanctions.” § 2002(a)(2)(B). Additionally, those creditors who elected to collect 110 percent of compensatory damages awarded were required to further relinquish “all claims and rights to punitive damages awarded in connection with such claim.” § 2002(a)(2)(C). Lastly, those who elected to collect 100 percent of compensatory damages awarded were required to “relinquish[ ] all rights to execute against or attach property that is at issue in claims against the United States before an international tribunal....” § 2002(a)(2)(D).
On or about March 20, 2003, the Hegnas applied for payment under VTVPA § 2002(a)(2)(A)(ii), as amended by TRIA § 201(c)(1). In doing so, they were required to submit documentation to the Office of Foreign Assets Control (“OFAC“) of the Department of Treasury describing “all ongoing attachment and/or execution proceedings relating to the [outstanding] judgment.” Payments to Persons Who Hold Certain Categories of Judgments Against Cuba or Iran, 68 Fed.Reg. 8077, 8078 (Feb. 19, 2003), (available at 2003 WL 354372). As discussed above, the Hegnas had obtained writs of attachment seeking the levy, sale, or turnover of the Chicago properties two months prior to submitting their application, and they informed OFAC of the pendency of those proceedings in their applications. Additionally, the OFAC application required the Hegnas to submit the following disclosures regarding their statutory relinquishment of rights in the event of a pro rata payment:
In the event that ... the payment that I receive will be less than the full amount of compensatory damages awarded to me... I hereby relinquish (1) all rights and claims to punitive damages awarded in connection with the claim or claims I brought under 28 U.S.C. 1605(a)(7) ... and (2) all rights to execute against or attach property that is at issue in claims against the United States before an international tribunal or that is the subject of awards by such tribunal. I understand that the relinquishment that I make in the event of any pro rata distribution is irrevocable once the payment is credited to the bank account I have identified in this application....
Id.
While the Hegnas’ applications for payment from OFAC were pending, they continued to pursue relief through the attachment of the Chicago properties. After the district court issued writs of attachment seeking the levy and sale or turnover of the Chicago properties, the matter was referred to a magistrate judge. On April 21, 2003, shortly after applying for payment from OFAC, the Hegnas moved for a turnover order to obtain title to the properties. The United States appeared pursuant to
II. Discussion
The Hegnas challenge the district court‘s order quashing the writs of attachment on the Chicago properties, arguing that district court erred in concluding that the receipt of payment pursuant to VTVPA § 2002(d)(1) (as amended by TRIA § 201(c)(4)) forced a relinquishment of their rights to pursue attachment remedies against the Chicago properties. We review the district court‘s determinations of law de novo. See Hileman v. Maze, 367 F.3d 694, 696 (7th Cir.2004).
The Hegnas present several arguments in attempts to persuade this Court that the statutory relinquishments have no application to their pursuit of the attachment and execution of the Chicago properties. We begin with the Hegnas’ argument that the application of the statutory relinquishments is solely prospective in nature. According to the Hegnas, their pre-July 30, 2003 efforts to attach the Chicago properties could not be defeated by their collection of payment on that date; that is, they believe that, so long as they had begun the process of attaching property prior to the actual receipt of funds from the Department of Treasury, the receipt of those funds is irrelevant to the completion of the attachment and execution process.
The Hegnas’ argument conflicts with the language of VTVPA § 2002(a)(2)(D), and for that reason, it must be rejected. The amended VTVPA § 2002(d)(5) incorporates the requirement set forth in § 2002(a)(2)(D) that an applicant “relinquish[] all rights to execute against or attach property that is at issue in claims against the United States before an international tribunal....” See VTVPA § 2002(d)(5)(B), (as amended by TRIA § 201(c)(4)) (emphasis added). The word “all” communicates that no right to execute or attach property survives the acceptance of payment, regardless of when the claimant initiated the attachment process.
This theory must fail. Despite the Hegnas’ perfection of their interest in the Chicago properties, no turnover order had issued; their interest remained open to challenge while the motion for turnover was pending in the district court. See 100 W. Monroe Partnership v. Carlson, 319 Ill.App.3d 761, 769 (Ill.App. 1 Dist.2001) (“A citation lien remains subject to attack and modification until the turnover order. It is the turnover order which makes the lien irrevocable.“). In ruling on the Hegnas’ motion to turnover the Chicago properties, the district court was required by
Next, the Hegnas argue that § 2002(a)(2)(D) precludes only efforts to “execute against or attach [tribunal] properties,” but does not intend to preclude the post-levy sale or turnover of those properties. Under this theory, the Hegnas would have us believe that Congress intended to allow one type of execution proceeding—the post-levy sale—while precluding all others. The policy behind § 2002(a)(2)(D) does not support the Hegnas’ reading of the statute. The payments offered by the amended § 2002 are to serve as a substitute, rather than as a supplementary, method for the collection of compensatory damages awarded in § 1605(a)(7) lawsuits; for that reason, § 2002(a)(2)(D) requires the relinquishment of ”all rights to execute against or attach property” (emphasis added). To read a “post-levy execution” exception into the § 2002(a)(2)(D) relinquishment would be to detract from its purpose, that is, to demand a relinquishment of all rights to attach certain property in exchange for collection of funds from the United States. In the case that judgment-creditors receive only partial payment, they may continue to pursue outstanding compensatory damages by methods other than executing against tribunal property, see VTVPA § 2002(d)(5) (as amended by TRIA § 201(c)(4)), but the plain language of the statute compels the relinquishment of the right to pursue all forms of execution against tribunal property, including the post-levy turnover of such property.
The Hegnas also argue that this Court should view the magistrate‘s August 11, 2003 recommendation to deny the United States’ motion to quash the writs of attachment as if it had been granted prior to their July 2003 receipt of partial payment from the Department of Treasury. The Hegnas argue that, had the United States appeared to contest the attachment of the Chicago properties soon after the January 2003 writs of attachment were issued, instead of waiting until April 24, 2003 to do so, then the magistrate likely would have recommended a turnover order prior to Hegnas’ July 30, 2003 receipt of payment. Additionally, they contend that the United States failed to prove before the district court that the recommended stay of the turnover order was merited; therefore, they argue, this Court should consider the magistrate‘s recommendation for a turnover order as if there had been no suggested stay of that order. In their view, the district court should have granted a nunc pro tunc order, to predate the turnover order.
Lastly, the Hegnas argue that relinquishment is conditioned upon receipt of the claimant‘s entire proportionate share. They urge that their receipt of partial payment in July 2003 was insufficient to work a relinquishment of their rights under VTVPA § 2002(d)(5)(B) (as amended by TRIA § 201(c)(4)). We disagree. The amended § 2002(d)(5) provides for relinquishment of certain rights in exchange for payment, and it makes no exceptions for instances of partial or incomplete payment. As the plain language of the text clearly communicates, the § 2002(d)(B)(5) relinquishments are triggered whenever a claimant receives less than the complete compensatory damages awarded, regardless of the relative paucity of the amount received: “Any person receiving less than the full amount of compensatory damages awarded to that party in a judgment... shall be required to relinquish rights ... with respect to enforcement against property that is at issue in claims against the United States before an international tribunal....” VTVPA § 2002(d)(5) (as amended by TRIA § 201(c)(4)). The phrase “less than the full amount of compensatory damages,” id., encompasses a payment that is less than the full proportionate share.
Thus, having concluded that the Hegnas’ relinquishments were effective upon their receipt of funds on July 30, 2003, we now turn to the issue of whether the Chicago properties were within the scope of those relinquishments. That is, we consider whether the Chicago properties were “at issue in claims against the United States before an international tribunal.” See VTVPA § 2002(d)(5)(B) (as amended by TRIA § 201(c)(4)). The United States contends that Iran has filed various claims before the Iran-United States Claims Tribunal at the Hague in regards to the United States’ refusal to turn over Iranian consular properties, including the Chicago properties. The Claims Tribunal was established pursuant to the Algiers Accords of 1981 for the purpose of resolving claims of United States nationals against Iran, claims of Iranian nationals against the United States, and certain claims of the United States and Iran against each other. Of particular relevance here is a claim filed by Iran against the United States in 1982, “alleging that the United States had 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, 33 Iran-U.S. Cl. Tr. Rep. 362 (1997), 1997 WL 1175789. In 1994, the Claims Tribunal postponed hearings “until further notice, noting that, pursuant to the Parties’ joint submission, if negotiations do not result in a full and final settlement, either party, without the consent of the other party, may request that the Tribunal fix a new date for the hearing.” Id. (internal citations omitted).
We conclude that the Chicago properties are at issue before the Claims Tribunal, and that the Hegnas’ acceptance of partial payment under VTVPA precludes the Hegnas from attaching those properties in aid of execution of their judgment against Iran. See VTVPA § 2002(d)(5) (as amended by TRIA § 201(c)(4)). Having concluded that the Hegnas forfeited any right that they may have had under § 201(a) of TRIA to attach the Chicago properties in aid of execution of their judgment, we need not reach the issue of whether those properties were subject to attachment as “blocked assets” within the meaning of § 201(d)(2) of TRIA.
III. Conclusion
For the foregoing reasons, we AFFIRM the judgment of the district court.