Case Information
[PUBLISH] IN THE UNITED STATES COURT OF APPEALS FOR THE ELEVENTH CIRCUIT ________________________ Nо. 13-11339
________________________ D.C. Docket No. 8:09-cv-02308-RAL-MAP KEITH STANSELL,
MARC GONSALVES,
THOMAS HOWES,
JUDITH G. JANIS,
CHRISTOPHER T. JANIS,
GREER C. JANIS,
MICHAEL I. JANIS,
JONATHAN N. JANIS,
Plaintiffs - Appellees, versus
REVOLUTIONARY ARMED FORCES OF COLUMBIA, (FARC), et al.,
Defendants, JOSE RICUARTE DIAZ HERRERA,
Claimant - Appellant, WACHOVIA BANK,
a Division of Wells Fargo Bank, N.A., et al.,
Garnishees, MERCURIO INTERNATIONAL S.A., et al.,
Claimants.
________________________ No. 13-11959
________________________ D.C. Docket No. 8:09-cv-02308-RAL-MAP KEITH STANSELL,
MARC GONSALVES,
THOMAS HOWES,
JUDITH G. JANIS,
CHRISTOPHER T. JANIS,
MICHAEL I. JANIS,
GREER C. JANIS,
JONATHAN N. JANIS,
Plaintiffs - Appellees, versus
REVOLUTIONARY ARMED FORCES OF COLUMBIA (FARC), et al., Defendants, CARMEN SIMAN,
ARMANDO JAAR,
RICARDO JAAR,
MOISES SAIEH,
CARLOS SAIEH,
ABDALA SAIEH,
JAQUELINE SAIEH,
U.S. Citizen Beneficial Owner of Brunello Ltd. Trust,
C. W. SALMAN PARTNERS,
SALMAN CORAL WAY PARTNERS,
CONFECCIONES LORD S.A.,
ALM INVESTMENT FLORIDA, INC.,
VILLAROSA INVESTMENTS FLORIDA, INC.,
KAREN OVERSEAS, INC.,
MLA INVESTMENTS, INC.,
JACARIA FLORIDA, INC.,
SUNSET & 97TH HOLDINGS, LLC,
MARIAM SUTHERLIN,
JAMCE INVESTMENTS, LTD.,
AMELIA SAIEH,
Claimants - Appellants, KATHYA SAIEH,
JAIME SAIEH,
LAURA SAIEH,
SANDRA SAIEH,
KAREN SAIEH,
GRANADA ASSOCIATES, INC.,
Defendants - Appellants.
________________________ No. 13-12019
________________________ D.C. Docket No. 8:09-cv-02308-RAL-MAP KEITH STANSELL,
MARC GONSALVES,
THOMAS HOWES,
JUDITH G. JANIS,
CHRISTOPHER T. JANIS, et al.,
Plaintiffs - Appellees, versus
REVOLUNTIONARY ARMED FORCES OF COLOMBIA (FARC), et al., Defendants, PLAINVIEW FLORIDA II, INC.,
C. W. SALMAN PARTNERS,
SALMAN CORAL WAY PARTNERS,
Claimants - Appellants.
________________________ No. 13-12116
________________________ D.C. Docket No. 8:09-cv-02308-RAL-MAP KEITH STANSELL,
MARC GONSALVES,
THOMAS HOWES,
JUDITH G. JANIS,
CHRISTOPHER T. JANIS, et al.,
Plaintiffs - Appellees, versus
REVOLUTIONARY ARMED FORCES OF COLOMBIA, (FARC), et al.,
Defendants, CARMEN SIMAN,
ARMANDO JAAR,
MOISES SAIEH,
CARLOS SAIEH,
Claimants - Appellants.
________________________ No. 13-12171
________________________ D.C. Docket No. 8:09-cv-02308-RAL-MAP KEITH STANSELL,
MARC GONSALVES,
THOMAS HOWES,
JUDITH G. JANIS,
CHRISTOPHER T. JANIS,
GREER C. JANIS,
MICHAEL I. JANIS,
JONATHAN JANIS,
Plaintiffs - Appellees, versus
REVOLUTIONARY ARMED FORCES OF COLUMBIA (FARC), et al., Defendants, KATHYA SAIEH,
LAURA SAIEH,
SANDRA SAIEH,
KAREN SAIEH,
Defendants - Appellants, CARLOS SAIEH,
BRUNELLO, LTD.,
JACQUELINE SAIEH,
U.S. Citizen Beneficial Owner of Brunello Ltd. Trust,
Claimants - Appellants.
________________________ No. 13-12337
________________________ D.C. Docket No. 8:09-cv-02308-RAL-MAP KEITH STANSELL,
MARC GONSALVES,
THOMAS HOWES,
JUDITH G. JANIS,
CHRISTOPHER T. JANIS,
GREER C. JANIS,
MICHAEL I. JANIS,
JONATHAN N. JANIS,
Plaintiffs - Appellees, versus
REVOLUTIONARY ARMED FORCES OF COLOMBIA (FARC), et al., Defendants, LUIS SUTHERLIN,
Claimant - Appellant.
________________________ Appeals from the United States District Court for the Middle District of Florida ________________________ (October 16, 2014)
Before WILSON, JORDAN and BLACK, Circuit Judges.
WILSON, Circuit Judge:
These appeals arise from the collection efforts of victims of a terrorist kidnapping in Colombia. After obtaining a nine-figure default judgment against their captor, they attempted to collect through a series of ex parte garnishments and executions against third parties with purported illicit ties to the captor. The third- party claimants challenge the judgments against their property on both substantive and procedural grounds, including alleged due process violations arising from the ex parte manner in which the district court initially handled the proceedings. We affirm the district court as to all appeals but one: No. 13-12171, concerning Brunello Ltd.
I. Global Discussion
Because common themes run through all appeals, we initially discuss the underlying facts and common issues globally. Later, we will apply our conclusions to the particular circumstances of each appeal and analyze the unique issues in a more individualized manner for each third-party claimant.
A. Underlying Procedural and Factual Background On February 13, 2003, Keith Stansell, Marc Gonsalves, Thomas Howes, and Thomas Janis were flying over Colombia while performing counter-narcotics reconnaissance. Members of the Revolutionary Armed Forces of Colombia (FARC) shot their plane down and, after the plane’s crash landing, captured the group. FARC immediately executed Janis and took the survivors hostage, holding them for over five years. After they were rescued and returned to the United States, Stansell, Gonsalves, and Howes—along with Janis’s wife, Judith G. Janis, as personal reрresentative of his estate, and his surviving children, Christopher T. Janis, Greer C. Janis, Michael I. Janis, and Jonathan N. Janis—(collectively, Plaintiffs) filed a complaint against FARC in the United States District Court for the Middle District of Florida under the Antiterrorism Act, 18 U.S.C. § 2333, naming FARC and a number of associated individuals as defendants. After court- directed service of summons by publication, FARC failed to appear, and the district court entered a default judgment in favor of Plaintiffs in the amount of $318,030,000 on June 15, 2010.
Because of the difficulty inherent in the direct execution of a judgment against a terrorist organization, Plaintiffs sought to satisfy their award by seizing the assets of “agenc[ies] or instrumentalit[ies]” of FARC pursuant to Section 201(a) of the Terrorism Risk Insurance Act of 2002, Pub. L. No. 107-297, § 201(a), 116 Stat. 2322, 2337 (TRIA), [1] which reads:
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 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.
TRIA § 201(a). The elements a party is required to establish before executing
under TRIA § 201 are therefore quite straightforward. The party must first
establish that she has obtained a judgment against a terrorist party that is either for
a claim based on an act of terrorism or for a claim for which a terrorist party is not
immune.
Weininger v. Castro
,
TRIA defines “blocked assets” as “any asset seized or frozen by the United
States under section 5(b) of the Trading With the Enemy Act [(TWEA)] or under
sections 202 and 203 of the International Emergency Economic Powers Act
[(IEEPA)].” TRIA § 201(d)(2)(A) (citation omitted). Assets are blocked when the
United States Department of the Treasury Office of Foreign Assets Control
(OFAC) designates the owner of the assets as a Specially Designated Narcotics
Trafficker (SDNT). 31 C.F.R. §§ 594.201, 594.301, 597.201, 597.303.
OFAC’s blocking power is authorized by TWEA, 12 U.S.C. § 95a, 50 App. U.S.C.
§§ 1–14, 16–39, 40–44, and the IEEPA, 50 U.S.C. §§ 1701–1706, the blocking
authority of which TRIA § 201 includes in its definition of blocked assets.
[2]
OFAC
also has blocking authority under other legislation not mentioned in TRIA § 201,
including the Foreign Narcotics Kingpin Designation Act, 21 U.S.C. §§ 1901–08
(Kingpin Act). OFAC specifies the jurisdictional basis for any designation it
makes, i.e. the statute under which an individual or entity is designated. Thus, the
blocking of assets by OFAC does not necessarily bring those assets within the
ambit of TRIA execution.
See Stansell v. Revolutionary Armed Forces of Colom.
(Mercurio)
,
TRIA itself does not define the term “agency or instrumentality.” However, § 201 is codified as a note to the Foreign Sovereign Immunities Act, 28 U.S.C. §§ 1330, 1602–11 (FSIA). 28 U.S.C. § 1610 (note). The FSIA defines the term:
An “agency or instrumentality of a foreign state” means any entity— (1) which is a separate legal person, corporate or otherwise, and (2) which is an organ of a foreign state or political subdivision thereof, or a majority of whose shares or other ownership interest is owned by a foreign state or political subdivision thereof, and (3) which is neither a citizen of a State of the United States as defined in section 1332(c) and (e) of this title, [5] nor created under the laws of any third country.
Id. § 1603(b). Claimants here disagree with the district court’s standard as well as its factual determinations regarding the agency or instrumentality status of each.
Plaintiffs initiated their collection efforts in each instance ex parte, without any direct notice to Claimants. The district court found that, for purposes of TRIA execution, each Claimant was an agency or instrumentality [6] of FARC and that each asset was blocked. Importantly, each Claimant eventually discovered the proceedings against their property. In each case, the district court sided with Plaintiffs and allowed the collection efforts to proceed (or, where such efforts had been completed, to lie).
Claimants appealed the various orders granting Plaintiffs’ motions seeking to collect on their judgment using Claimants’ assets and denying the motions filed by Claimants seeking relief. They argue separately a number of issues on appeal, including many that Claimants share in common with one another: (1) that they were denied constitutional and statutory rights to notice and a hearing because they were not served with the writs оf garnishment and execution or the motions requesting them; (2) that they were erroneously designated agencies or instrumentalities of FARC by the district court; (3) that their assets were not reachable under TRIA § 201 because they have been removed from OFAC’s list of SDNTs; (4) that Plaintiffs did not obtain the licenses required to execute against OFAC-blocked assets; (5) that the judgments must be set aside for fraud; and (6) that on remand, we should assign a different judge to the proceedings.
B. Analysis of the Issues We now turn to an analysis of the common issues argued on appeal.
1. Constitutional and Statutory Due Process
Claimants contend that they were denied their rights to notice of the
execution proceedings and an opportunity to be heard in violation of the Fifth
Amendment, Florida law, and the FSIA. Whether a due process violation occurred
is reviewed de novo.
Ali v. U.S. Att’y Gen.
,
Florida law has specific requirements for notice and an opportunity to be
heard. Fla. Stat. § 56.21 (“When levying upon real property, notice of such
levy and execution sale and affidavit . . . shall be made to the property owner of
record in the same manner as notice is made to any judgment debtor pursuant to
this section . . . .”); Fla. Stat. § 56.16 (outlining procedure for third-party claimants
to halt an execution sale); Fla. Stat. § 77.055 (requiring service of garnishee’s
answer to the writ on “any . . . person disclosed in the garnishee’s answer to have
any ownership interest in the” asset); Fla. Stat. § 77.07(2) (permitting “any other
person having an ownership interest in [garnished] property” to move to dissolve
the writ with a motion “stating that any allegation in plaintiff’s motion for writ is
untruе”). In a nutshell, Florida law provides certain protections to third parties
claiming an interest in property subject to garnishment or execution. Such law is
effective in proceedings in federal court, unless, as the district court held here, it is
preempted by federal statute. Fed. R. Civ. P. 69(a)(1). We review de novo a
district court’s determination that federal law preempts state law.
Pace v. CSX
Transp., Inc.
,
The FSIA also contains a notice requirement. 28 U.S.C. § 1610(c)
(requiring notice required under § 1608(e) be provided where property is attached
under § 1610(a) or (b)). Whether this notice requirement applies to TRIA
execution is a question of law we review de novo.
Mercurio
,
a. Constitutional Due Process
Preliminarily, we address whether, under the Fifth Amendment, Claimants
were entitled to due process. The district court and Plaintiffs have at some points
maintained that some were not so entitled due to their status as foreign nationals.
Where a district court exercises its jurisdiction over property within the United
States, however, the owners of that property have due process rights regardless of
their location or nationality.
Russian Volunteer Fleet v. United States
, 282
U.S. 481, 491–92,
Now, we consider what due process requires. As Plaintiffs point out in their
briefs, рost-judgment motions and writs typically need not be served on
defendants, including when collection is pursued under the FSIA.
Peterson v.
Islamic Republic of Iran
,
TRIA execution requires two separate determinations regarding the property
being executed: (i) that the asset is blocked, and (ii) that the owner of the asset is
an agency or instrumentality of the judgment debtor. TRIA § 201(a). While the
first can be definitively established by the fact that OFAC has taken action against
the alleged agency or instrumentality under TWEA or the IEEPA, the second is a
separate determination in addition to blockage not dispositively decided by OFAC
designation. Furthermore, because an agency or instrumentality determination
carries drastic results—the attachment and execution of property—it undeniably
implicates due process concerns.
United States v. Bissell
,
Plaintiffs respond by emphasizing that this court and others have repeatedly
held that due process does not require service of post-judgment motions.
Typically, however, such motions are directed at the judgment debtor,
see Brown
v. Liberty Loan Corp. of Duval
,
It may be argued that agencies or instrumentalities are on constructive notice
because, as agencies or instrumentalities of the judgment debtor—in this case,
FARC—they share a legal identity with the judgment debtor.
Cf.
28 U.S.C. §
1603(a) (defining “foreign state” for FSIA purposes to include an agency or
instrumentality of a foreign state). While that reasoning seems rational in a
vacuum, when considered in context, it is circular and illogical. That is, a third
party can only be deemed to be on notice if it is associated with the judgment
debtor, so it cannot be considered to have such notice until the district court makes
the agency or instrumentality determination. Without notice and a fair hearing
where both sides are permitted to present evidence, the third party never has an
opportunity to dispute its classification as an agency or instrumentality.
Cf. Alejandre v. Telefonica Larga Distancia de P.R., Inc.
,
Further, because Claimants were entitled to the basic constitutional protection of due process, they were entitled to be heard on their challenge to the agency or instrumentality issue. The district court eventually held generally that “some form” of process was due and that Claimants were afforded an adeqaute opportunity to be heard by (i) the requirement that Plaintiffs file motions in the district court and seek entry of a court order, (ii) the opportunity to challenge their respective designations both administratively and judicially, and (iii) the stay pending the outcome of Mercurio . The first of these cannot constitute the requisite opportunity to be heard. Requiring evidence from a party seeking to execute against a third party’s assets does nothing to give the third party an opportunity to be heard. Due process contemplates offering a party an opportunity to rebut charges leveled against it, not allowing that party’s opponent to present evidence supporting that charge.
The second manner in which Claimants were, according to the district court, given an opportunity to be heard is also constitutionally deficient. Again, the agency or instrumentality determination is separate from the determination that an asset is blocked and carries more immediate and substantial consequences than does the SDNT designation. Moreover, designation is a unilateral move that takes place and blocks a SDNT’s assets before the SDNT has an opportunity to challenge the designation. [9] An administrative challenge to OFAC designation affords a party an opportunity to challenge the decision to block its assets, not to challenge its status as an agency or instrumentality.
Finally, the third example of Claimants’ opportunity to be heard—the stay— standing alone, is not sufficient to provide Claimants with due process. However, in conjunction with an actual opportunity for Claimants to be heard, it may satisfy due process. We will examine the circumstances of each appeal below to determine the extent to which each Claimant had a sufficient opportunity to be heard.
In addition, due process must not only be adequate; it must be timely.
Goldberg v. Kelly
,
We assess whether the procedure afforded to a party is timely considering
the three factors set forth in
Mathews v. Eldridge
,
[F]irst, . . . the private interest that will be affected by the prejudgment measure; second, . . . the risk of erroneous deprivation through the procedures under attack and the probable value of additional or alternative safeguards; and third, [we pay] principal attention to the interest of the party seeking the prejudgment remedy, with, nonetheless, due regard for any ancillary interest the government may have in providing the procedure or forgoing the added burden of providing greater protections.
However, the second and third factors weigh substantially in favor of
immediate attachment. Before a writ of garnishment or execution pursuant to
TRIA § 201 issues, a district court must determine that the property owner is a
SDNT designated under TWEA or the IEEPA and is an agency or instrumentality
of the judgment debtor terrorist party. The district court did that here, after
Plaintiffs made factual proffers on those issues. The risk of erroneous deprivation
is therefore diminished. The third factor weighs heavily in favor of a later hearing:
ensuring adequate satisfaction of judgments against terrorist parties. During the
pendency of execution proceedings, a number of events may occur which make
satisfaction using a particular asset impossible. Other judgment creditors may seek
to execute against the asset. The government may take action that makes the asset
unreachable, including seizure or de-listing of the alleged agency or
instrumentality (which may or may not be the result of a finding that the SDNT
designation was incorrectly reached), the latter of which would enable the asset
owner to move the asset (or proceeds from its sale) outside the reach of any United
States district court.
Cf. Calero-Toledo v. Pearson Yacht Leasing Co.
, 416 U.S.
663, 679,
b. Statutory Entitlements to Notice and Hearing Now we consider whether Florida procedure governs TRIA execution.
Plaintiffs contend, and the district court held, that TRIA § 201 partially conflicts
with Florida garnishment and execution statutes and that their notice and hearing
provisions therefore do not govern garnishment and execution procedure under
TRIA § 201. Essentially, the district court held that, because TRIA § 201’s
purpose is to facilitate collecting on judgments against terrorist parties, any state
legislation that might hinder collection efforts in any manner—even if their
purpose was to give potentially innocent, third-party claimants the opportunity to
contest execution efforts—conflicted with TRIA § 201. We disagree. Nothing
about the language or purpose of TRIA § 201 indicates that it conflicts with
Florida’s requirements that owners of property being garnished or executed against
are entitled to notice, notwithstanding TRIA’s use of the word “notwithstanding.”
United States v. Holy Land Found. for Relief & Dev.
,
We cannot say that the state garnishment law in this case is preempted. Contrary to the district court’s conclusion, Florida law does not shield terrorist assets from execution. Instead, Florida’s notice requirements simply provide the procedure for executing against the full range of assets that fall within the ambit of TRIA § 201. Florida’s statutory notice scheme for garnishment proceedings does not conflict with TRIA’s “notwithstanding” provision because the assets TRIA subjects to execution are still subject to execution. Therefore, TRIA § 201 does not preempt Florida law, and judgment creditors seeking to satisfy judgments under it must follow the notice requirements of Florida law. Fed. R. Civ. P. 69(a)(1).
Claimants also assert that, pursuant to the FSIA, specifically 28 U.S.C. § 1610(c), Plaintiffs should have served a copy of the default judgment required by 28 U.S.C. § 1608(e) on Claimants. Here, Claimants are wrong for a number of reasons. First, § 1610(c) governs “attachment[s] or execution[s] referred to in subsections (a) and (b) of this section.” The attachments and executions here were obtained pursuant to TRIA § 201, not 28 U.S.C. § 1610(a) or (b). Second, § 1608(e) deals with default judgments obtained against foreign states and their political subdivisions and agencies or instrumentalities. FARC is not a foreign state, and Claimants are not political subdivisions or agencies or instrumentalities of one. Therefore, § 1608(e) notice is, by its very plain terms, not required in this cоntext.
In sum, the district court erred when it held that Florida law did not govern the garnishment and execution procedures and that the alleged agencies or instrumentalities were not entitled to due process. Whether and how this affects the disposition of each appeal is contingent on their respective facts, and we thus reserve the more particularized analyses for the discussions of each appeal below.
2. Agency or Instrumentality
Claimants’ second primary argument on appeal is that they were erroneously
found to be agencies or instrumentalities of FARC. They object both to the district
court’s chosen standard for identifying agencies or instrumentalities and to the
district court’s ultimate determinations. Turning to the preliminary question,
whether the district court applied the correct standard in reaching the agency or
instrumentality determination is a legal question we review de novo.
Mercurio
,
Claimants argue that, because TRIA does not have its own definition of “agency or instrumentality” and is codified as a note to 28 U.S.C. § 1610, the district court should have applied the FSIA definition, 28 U.S.C. § 1603(b), which applies to § 1610. To apply that definition here, we would have to tweak § 1603(b)’s definition because it requires that a purported agency or instrumentality be an organ of, or majority-owned by, “a foreign state or political subdivision thereof,” 28 U.S.C. § 1603(b)(2), and Claimants are alleged to be agencies or instrumentalities of a non-state terrorist organization. By suggesting that agencies or instrumentalities of parties other than foreign states or their political subdivisions may be subject to TRIA execution, Claimants seem to imply that, where the statute contains standards that are inapplicable to non-state terrorist parties, we should simply relax the foreign state requirement. Assuming that such a re-reading of the statute is appropriate, applying the § 1603(b) standard to TRIA § 201 would permit TRIA execution against terrorist parties or parties that are organs of or majority-owned by a terrorist party, regardless of whether the terrorist party is a state or non-state actor. 28 U.S.C. § 1603(b)(2).
We cannot adopt this flexible application of § 1603(b) because it would
create an absurd result and leave TRIA § 201 nearly meaningless. First, because
this would only permit execution against organs, political subdivisions, and
majority-owned organizations, individuals are affirmatively excluded from
execution.
Samantar v. Yousuf
,
Making the FSIA’s standard more flexible dоes not help, either. If either the
Samantar
non-individual requirement or the majority-ownership requirement is
applied, TRIA § 201 would still be toothless. Sovereign countries—the parties the
FSIA contemplates—operate with more transparency, and their agencies or
instrumentalities are likelier to be diplomatic organs or state-owned enterprises
with clear ownership structures that makes application of § 1603(b) feasible.
See,
e.g.
,
Filler v. Hanvit Bank
,
Florida law will almost certainly not list FARC as a shareholder of record. Instead, it will operate through layers of affiliated individuals and front companies.
Indeed, the agencies or instrumentalities here were, according to OFAC, part
of FARC’s money laundering operations. These operations result from a need for
clandestine operation, the type § 1603(b) cannot possibly address. Applying §
1603(b) to TRIA § 201 would put the victims of terrorist organizations in the same
place they were prior to TRIA’s enactment: proud owners of multi-million-dollar
judgments with no means of enforcing those judgments. This would counteract
Congress’s purpose in enacting TRIA.
Hausler
,
Because the realities of terrorism make it unrealistic to apply the FSIA standard to TRIA execution, we think that the district court developed a proper standard. As the district court noted in its orders finding agency or instrumentality status, its standard “us[ed] the plain and ordinary meaning of those terms.” Claimants here give us no reason to believe that any other standard is preferable or proper.
In addition to attacking the standard applied by the district court, Claimants challenge the district court’s factual determinations regarding agency or instrumentality status. Because these challenges present fact-specific questions, we leave this discussion to the individualized analyses, where we will review the district court’s determinations for clear error. United States v. Perkins , 348 F.3d 965, 969 (11th Cir. 2003) (“We assess the district court’s findings of fact under the clearly erroneous standard . . . .”).
3. Effect of OFAC De-listing.
Claimants argue that their OFAC de-listing should operate retroactively to put their assets out of Plaintiffs’ reach because they are no longer blocked for purposes of TRIA § 201. Plaintiffs respond that, once the writ of garnishment is served on the garnishee and their lien attaches, subsequent de-listing has no effect. OFAC’s regulations clearly set out the result in such a situation:
Any amendment, modification, or revocation . . . of any order, regulation, ruling, instruction, or license issued by . . . [OFAC] shall not, unless otherwise specifically provided, be deemed to affect . . . any civil or criminal suit or proceeding commenced or pending prior to such amendment, modification, or revocation . All penalties, forfeitures, and liabilities under any such order, regulation, ruling, instruction, or license shall continue and may be enforced as if such amendment, modification, or revocation had not been made .
31 C.F.R. § 536.402 (emphasis added). Claimants contend that the district court
incorrectly interpreted this regulation to prevent giving retroactive effect to OFAC
de-listing. We review a district court’s interpretation of a regulation de novo.
Owner-Operator Indep. Drivers Ass’n v. Landstar Sys., Inc.
,
Pursuant to the clear terms of the OFAC regulation, if Plaintiffs commenced
their garnishment proceedings prior to revocation of the OFAC order listing them
as SDNTs, then the order of revocation “shall not . . . be deemed to affect” the
garnishment proceedings. 31 C.F.R. § 536.402. The question is, then, when
proceedings commenced relative to Claimants’ de-listing. Because Federal Rule of
Civil Procedure 69(a)(1) commands that state civil procedure governs execution
proceedings, Florida law governs this issue. In Florida, execution and garnishment
proceedings are ancillary proceedings.
See Burdine’s, Inc. v. Drennon
, 97 So. 2d
259, 260 (Fla. 1957);
Williams Mgmt. Enters., Inc. v. Buonauro
,
Precedent cited by Claimants seemingly holding that de-listing operates
retroactively does not support that proposition. Claimants’ cherry-picked language
from
Ministry of Defense and Support for the Armed Forces of the Islamic
Republic of Iran v. Elahi
appears to indicate that the assets must be blocked at the
time judgment against the asset is finalized.
This rule is not just prescribed by law; it is also good policy. Applying de- listing to the “blocked asset” element of an ongoing TRIA execution proceeding would undermine the finality of a judgment until direct review of the judgment concludes. Further, such a policy would provide an incentive to SDNTs to draw out and delay execution proceedings while their OFAC administrative challenges were pending. Such a tactic counters the policy of satisfying judgments, especially where OFAC de-listing is not necessarily an exoneration.
4. OFAC Licenses
Claimants also argue that the execution violated OFAC regulations which purportedly require a party executing or attaching blocked assets to obtain a license from OFAC. 31 C.F.R. § 598.205(a) and (e). This section, however, applies only where a party is designated pursuant to the Kingpin Act and the Foreign Narcotics Kingpin Sanctions Regulations, 31 C.F.R. § 598.314(b) (Kingpin Regulations). 31 C.F.R. § 598.205 (listing the Kingpin Act as authority for the regulation requiring licensure). The only party designated under the Kingpin Act and its accompanying regulations was Herrera; therefore, this argument is inapplicable to the other parties. [14]
5. Fraud
Claimants argue that the means by which Plaintiffs moved against their
assets constituted fraud, creating grounds for setting aside the judgments under
Federal Rule of Civil Procedure 60(b)(3). We review a district court’s denial of a
Rule 60(b)(3) motion for abuse of discretion.
Cox Nuclear Pharmacy, Inc. v. CTI,
Inc.
,
However, none of the complained-of acts or omissions provide clear and
convincing evidence of fraud. The failure to serve was based on the good-faith but
erroneous belief that it was not required, which was based on cases instructing that
post-judgment motions need not be served.
See, e.g.
,
Peterson
,
6. Reassignment
Finally, Claimants request reassignment to a new district court judge on remand. We consider three factors when a party requests reassignment: “(1) whether the original judge would have difficulty putting his previous views and findings aside; (2) whether reassignment is appropriate to preserve the appearance of justice; (3) whether reassignment would entail waste and duplication out of proportion to gains realized from reassignment.” United States v. Torkington , 874 F.2d 1441, 1447 (11th Cir. 1989) (per curiam). Only Brunello faces a remand, but as we discuss below, our remand includes specific instructions that give the district сourt little discretion. Moreover, we are confident that Judge Lazzara will be fair and just. Therefore, reassignment is unnecessary.
III. Individualized Discussion We now turn to a discussion of the facts of the individual appeals and apply our generalized conclusions to the circumstances of each appeal. Where an appeal raises a unique argument, we analyze that argument to decide whether it is grounds for reversing the district court.
A. No. 13-11339 (Herrera)
OFAC designated Jose Ricuarte Diaz Herrera as a SDNT on May 13, 2010, 75 Fed. Reg. 27,118, for allegedly assisting in FARC’s financial fronts network, thereby blocking his assets. [16] Herrera attempted to use an electronic funds transfer (EFT) to transfer some of his own money from a Colombian brokerage firm account into a deposit account in his name at a Colombian bank in June of 2010. Wachovia, N.A., acting as an intermediary in the EFT, halted the transfer no later than September 8, 2010, and notified OFAC, as it must under 31 C.F.R. § 501.603. Herrera subsequently began the process for de-listing as a SDNT by filing a petition with the OFAC office in Bogota, Colombia, as provided in 31 C.F.R. § 501.807. That petition was granted when OFAC removed Herrera’s SDNT designation and unblocked his assets effective April 30, 2013. 78 Fed. Reg. 28,700-01 (May 15, 2013).
On December 15, 2010, Plaintiffs moved for a writ of garnishment against
the blocked Wachovia funds. The district court granted the motion on December
16, holding that (1) Herrera was an agency or instrumentality of FARC; (2) funds
blocked under the Kingpin Act were subject to garnishment under TRIA § 201; (3)
Plaintiffs did not need a license from OFAC to garnish the funds; (4) the blocked
funds were property within the United States; and (5) Herrera was not entitled to
notice or a hearing. After the writ was served on Wachovia, Wachovia filed an
answer to the writ on January 11, 2011, wherein it objected to the writ’s issuance
based on their assertion that Federal Rule of Civil Procedure 19 may have required
limited to those assеts which were blocked under the acts expressly listed in TRIA §
201(d)(2)(A): TWEA and the IEEPA.
Mercurio
,
the joinder of other parties and other beneficiaries, including Herrera. The district court entered judgment against Wachovia on January 18, 2011, reaffirming that Herrera was not entitled to notice or a hearing. No notice of these proceedings was served on Herrera.
Herrera’s attorney in New York learned of the garnishment proceedings no later than January 26, 2011, eight days after the district court’s entry of judgment; the attorney was advised by counsel representing Wachovia to “take up his grievances with Judge Lazzara.” Herrera and his attorney failed to take any action until Herrera hired a Florida attorney on February 24, 2011. According to Herrera, before the attorney could accept fees for his representation in any matter related to the OFAC designation, he had to apply for and be issued a license from OFAC, which he obtained on May 12, 2011. Herrera still waited to file anything in the district court to address the garnishment proceedings until October 31, 2011, when he filed (1) a motion for relief from the judgment entered on January 18 pursuant to Federal Rules of Civil Procedure 12(b)(5), 55(c), and 60(b), as well as the Fifth Amendment; (2) a motion for relief from the writ of garnishment pursuant to Federal Rule of Civil Procedure 69(a)(1) and Florida garnishment law as well as the Fifth Amendment; and (3) a motion to disqualify Judge Lazzara pursuant to 28 U.S.C. § 455(a) and (b) as well as the Fifth Amendment. The district court denied the motion to disqualify on December 5, 2011, and stayed the remainder of the motions pending the outcome of Mercurio . After we released that opinion, the district denied the remaining motions, holding that laches barred consideration of them and that our opinion in Mercurio could not apply retroactively. Herrera appeals from that order.
Typically, a turnover judgment is the final, appealable judgment in
garnishment proceedings. Here, the district court entered that turnover judgment
on January 18, 2011. Federal Rule of Appellate Procedure 4(a) requires parties to
file any notice of appeal within thirty days after judgment is entered. Herrera did
not file anything with the district court until October 31, 2011, more than nine
months after the entry of judgment, when he filed motions seeking various types of
relief. The district court denied the consolidated motion on February 26, 2013.
Herrera timely filed a notice of appeal from that order. The order was final and
appealable.
Mirage Resorts, Inc. v. Quiet Nacelle Corp.
,
Nonetheless, the orders denied motions to set aside the judgment, so we
must consider “only the propriety of the denial or grant of relief and . . . not . . .
issues in the underlying judgment.”
Id.
Denials of Rule 60(b) and 55(c) motions
are generally subject to an abuse of discretion standard of review.
In re Worldwide
Web Sys., Inc.
,
However, motions to set aside for voidness under Rule 60(b)(4) are subject
to de novo review.
Burke v. Smith
,
A judgment can be set aside for voidness where the court lacked jurisdiction
or where the movant was denied due process.
United Student Aid Funds, Inc. v.
Espinosa
,
Herrera claims that the delay was out of his control because his attorney was required to obtain a license before he could be paid using the blocked funds. Assuming this excuses his delay, [17] Herrera still fails to provide us with grounds for considering the motion because he waited an additional five months after his attorney was licensed to file anything with the district court. Herrera does not give an acceptable reason for this delay. Therefore, the district court did not err in denying the Rule 60(b)(4) motion.
The additional grounds for voidness Herrera argues apply here are meritless.
The district court had subject matter jurisdiction. It is well settled that a judgment
is not void “simply because it is or may have been erroneous.”
Espinosa
, 559 U.S.
at 270,
Plaintiffs’ contention that assets blocked under the Kingpin Act are subject to TRIA execution is not a claim that the district court lacked jurisdiction. The district court had entered judgment on the writ before we issued Mercurio , so the mere fact that we later decided that TRIA § 201 does not apply to assets blocked under the Kingpin Act means the district court’s judgment may have been erroneous, but it does not mean the court lacked subject matter jurisdiction. Therefore, the district court had subject matter jurisdiction, and a motion to set aside the judgment for voidness does not lie based on lack of subject matter jurisdiction.
Herrera’s argument that the judgment was void because Plaintiffs failed to
obtain licenses from OFAC is likewise unavailing. Voidness for purposes of a
60(b)(4) motion contemplates lack of jurisdiction or defects in due process that
deprive a party of notice or an opportunity to be heard.
Espinosa
,
Motions filed pursuant to Rule 60(b)(6) and 60(b)(3) are not subject to the very generous timing considerations that 60(b)(4) motions are because they do not carry the same jurisdictional and due process concerns. See, e.g. , Hertz , 16 F.3d at 1130 (holding only that Rule 60(b)(4) motions are not subject to the “reasonable time” requirement). Thus, they “must be made within a reasonable time.” Fed. R. Civ. P. 60(c)(1). Even assuming again that we should not expect Herrera to have filed his motion before his attorney was licensed, the five-month delay that followed his licensure surely was unreasonable. Therefore, we will not consider the 60(b)(6) or 60(b)(3) claims.
Rule 55(c) provides an additional, less “stringent” standard: good cause.
Jones v. Harrell
,
Therefore, we affirm the district court’s order denying Herrera’s requested relief.
B. No. 13-12019 (The Partnerships and Plainview) Salman Coral Way Partners and C.W. Salman Partners (collectively, “the Partnerships”) are partnerships organized under Florida law. Plainview Florida II, Inc. (Plainview) оwns a 50-percent share of each of the Partnerships. The remaining 50 percent is owned by Granada & Associates, Inc. (Granada), which is not a party to this appeal.
OFAC designated the Partnerships as SDNTs under the IEEPA on March 7, 2007, because of alleged ties to the North Valley Cartel (NVC). Specifically, OFAC alleged that the Partnerships were owned by SDNT individuals who themselves had ties to the NVC. The Partnerships argued that those individuals, Carlos Saieh and Moises Saieh, had ownership interests in Granada, not any direct interest in the Partnerships. Additionally, the OFAC press release did not mention FARC. The Partnerships challenged their designation and received licenses from OFAC to continue operations. OFAC de-listed the Partnerships, as well as Granada and the Saiehs, on January 10, 2012.
As in Herrera’s case, Plaintiffs sought to execute against the Partnerships’ blocked assets under TRIA § 201. On August 31, 2011, Plaintiffs moved, ex parte, for writs of garnishment against deposit accounts held by the Partnerships at Terrabank, N.A. In support of the motion, Plaintiffs submitted the OFAC press release documenting the Partnerships’ alleged ties to the NVC and affidavits from two experts familiar with Colombian narcotrafficking. The affidavits, one from a Senior Analyst in the Office of Naval Intelligence and the other from a Colombian Marine Corps officer, documented FARC’s ties to the NVC. Both testified that the NVC, including its “individual members, divisions, and networks,” was an agency or instrumentality of FARC based on the district court’s standard. The district court granted the writs of garnishment on September 6, 2011. [18] Based on the fact that OFAC had designated the Partnerships as SDNTs because of alleged ties to the NVC, the district court found that they were agencies or instrumentalities of the NVC. Because of the testimony that the NVC, including its members, divisions, and networks, was an agency or instrumentality of FARC, the district court determined that the Pаrtnerships were in turn agencies or instrumentalities of FARC, [19] opening their blocked assets to execution by Plaintiffs under TRIA § 201. The Partnerships had not previously been directly linked to FARC by OFAC or any other executive or judicial authority.
The district court further determined that the Partnerships were not entitled to notice or an opportunity to be heard. Specifically, the court held that because TRIA § 201 preempts Florida garnishment law and does not contain any provisions for notice or an opportunity to be heard, the Partnerships would not be afforded those protections. Accordingly, the order granting the writs of garnishment was entered without formal notice to the Partnerships. On September 8, 2011, the district court stayed all garnishment proceedings pending the outcome of the Mercurio appeal. The district court later granted a motion for clarification from Plaintiffs, which allowed Plaintiffs to continue the garnishment action during Mercurio ’s pendency. [20] After service of the writs, Terrabank turned over the contents of the deposit accounts on September 23 without filing an answer.
On October 7, 2011, Plaintiffs moved for a writ of execution against four parcels of real property owned by the Partnerships. The district court granted the writ on October 11. Like the order granting the writ of garnishment, this order held that the Partnerships were not entitled to notice or an opportunity to be heard.
On November 29, 2011, United States Marshals levied on the real property by posting notice in conspicuous places and providing direct notice to the Partnerships, tenants, and management. They also published notice of the levy in a local newspaper for four weeks. This was the first notice the Partnerships received of the proceedings against their property. The Partnerships moved to vacаte the orders granting the writs of garnishment and execution and to quash the resulting writs on February 21, 2012, arguing that they were entitled to notice and an opportunity to be heard prior to issuance of the writs and requesting an evidentiary hearing. They also argued that the district court incorrectly found them to be agencies or instrumentalities of FARC. In support, they attached an affidavit from their accountant outlining their ownership structure: 50 percent owned by Granada and 50 percent owned by Plainview. The affidavit also asserted that Granada’s only capital contribution to the partnerships was its 1992 purchase of the 50 percent ownership stake and that Granada did not have access to the Partnerships’ bank accounts or control over its operations. The next day, the district court stayed ruling on that motion and reminded Plaintiffs of previous orders staying execution on the real property.
On January 9, 2013, we reversed the district court in Mercurio . The district court then lifted the stay and ordered Plaintiffs to respond to the Partnerships’ motion to vacate. Plaintiffs’ response conceded that the Partnerships were entitled to “some form” of due process and argued that they had received adequate notice through the OFAC designations and the levy on the real property. Though Plaintiffs had previously argued—and the district court had agreed—that the Partnerships were not entitled to notice, the district court denied the Partnerships’ request to reply to this change in Plaintiffs’ argument. The district court denied the Partnerships’ motion to vacate on April 19, 2013. [21] It held that the Partnerships received due process through (i) the notice of their OFAC designations, (ii) the stay of the sale of the real property, (iii) the opportunity to challenge OFAC’s designations both administratively and through judicial review, (iv) “the requirement that the Plаintiffs file a motion and seek entry of a court order,” and (v) the notice that came with the levy on the real property. The court further held that OFAC’s removal of the Partnerships’ SDNT status was irrelevant because OFAC’s regulations do not permit retroactive effect of de-listing. See 31 C.F.R. § 536.402.
The Partnerships timely filed a notice of appeal on April 29, 2013. We granted their motion to stay the sale of the real property on July 9. On appeal, the Partnerships argue that (1) they were denied constitutional due process, (2) they were denied statutory entitlements to notice and a hearing, (3) the agency or instrumentality standard applied by the district court was erroneous, and (4) the evidence did not support the agency or instrumentality finding.
First, contrary to the district court’s decision, the notice the Partnerships
received of their OFAC designation was not sufficient as to the TRIA execution
proceedings. Such a designation provides notice to the designee that its assets
have been blocked and of a number of other consequences, including the
potential
for TRIA execution. Having notice of the potential for proceedings without notice
of their timing, location, adverse parties, nature, etc., is not sufficient to satisfy due
process. The OFAC designation did not give the Partnerships notice that was
“reasonably calculated, under all the circumstances, to apprise interested parties of
the pendency of the action and afford them an opportunity to present their
objections,”
Mullane v. Cent. Hanover Bank & Trust Co.
,
The notice conveyed to the Partnerships through the levy on their real
property, however, did provide sufficient notiсe of the execution proceedings. The
Supreme Court has specifically stated “that in most cases, the secure posting of a
notice on the property of a person is likely to offer that property owner sufficient
warning of the pendency of proceedings possibly affecting his interests.”
Greene
v. Lindsey
,
The Partnerships were also afforded an opportunity to be heard. As discussed supra , the Partnerships were not entitled to a pre-writ hearing. Nevertheless, they had the opportunity to present evidence refuting the agency or instrumentality designation. They simply did not present any evidence that changed the district court’s position on the agency or instrumentality determination.
Even if constitutional due process standards are met, the Partnerships argue that the writs of garnishment and execution should be quashed for failure to comply with Florida’s statutory requirements for garnishment and execution. Despite the fact that the district court erred in holding that Florida law did not apply, the circumstances indicate that the decision was harmless. The Partnerships were not prevented from taking advantage of Florida law specifically providing for third-party challenges to garnishment proceedings. See Fla. Stat. § 77.07(2). The third party can move to dissolve the writ of garnishment by “stating that any allegation in plaintiff’s motion for writ is untrue.” Id. If the relevant allegation— here, agency or instrumentality status—is found to be untrue, the court dissolves the writ. Id. The Partnerships followed this procedure, and the district court, after due consideration of their argument, concluded that the agency or instrumentality allegation was “proved to be true.” See id. It therefore properly denied the motion to dissolve the writ. Any failure by the district court to conform to Florida’s notice procedures was harmless because the Partnerships received actual notice and were able to contest the allegations as provided in § 77.07; they merely failed to succeed on the merits.
The execution of the real property was likewise proper under Florida law.
The Partnerships complain that Plaintiffs did not furnish the required affidavit,
rendering the execution invalid. Fla. Stat. § 56.21;
cf. In re King
, 463 B.R.
555, 566 (Bankr. S.D. Fla. 2011) (setting aside an execution sale where judgment
creditors failed to comply with the § 56.21 30-day requirement). However,
“[w]hen a particular provision of a statute relates to some immaterial matter, where
compliance is a matter of convenience rather than substance, or where the
directions of a statute are given with a view to the . . . conduct of business merely,
the provision may generally be regarded as directory” and not mandatory.
Neal v.
Bryant
,
The Partnerships, moreover, were afforded an opportunity to present evidence to the district court rebutting Plaintiffs’ allegation that they were agencies or instrumentalities of FARC. In fact, the Partnerships presented evidence of their ownership, presumably under the incorrect understanding that § 1603(b) would control for TRIA § 201. As discussed above regarding the writs of garnishment, the court properly found that evidence immaterial to the agency or instrumentality allegation.
The Partnerships also argue that there was not a sufficient evidentiary basis
for the agency or instrumentality determination. This argument is unavailing. The
evidence Plaintiffs presented to the district court was sufficient to establish the
required relationship between FARC and the Partnerships, even if that relationship
was indirect.
Cf. In re Air Crash Disaster Near Roselawn, Ind., on Oct. 31, 1994
,
The remaining arguments raised by the Partnerships are meritless for reasons set forth in the global discussion. Therefore, we affirm the district court and lift the stay we imposed by order.
C. No. 13-11959 (Jamce Investments, Ltd., et al.) The appellants here assert ownership of cash deposits held at various banks.
The organizational appellants are the Partnerships, Granada, Confecciones Lord S.A. (Lord), ALM Investment Florida, Inc. (ALM), Villarosa Investments Florida, Inc. (Villarosa), Karen Overseas, Inc. (Overseas), MLA Investments, Inc. (MLA), Jacaria Florida, Inc. (Jacaria), Sunset & 97th Holdings, LLC (Sunset), and Jamce Investments, Ltd. (Jamce) (collectively, “the Organizations). The individual appellants are Jacqueline Saieh (Jacqueline), Miriam Sutherlin (Miriam), Sandra Saieh (Sandra), Laura Saieh (Laura), Karen Saieh (Karen), Kathya Saieh (Kathya), Jaime Saieh (Jaime), Amelia Saieh (Amelia), Abdala Saieh (Abdala), Carlos Saieh (Carlos), Carmen Siman de Jaar (Carmen), Armando Jaar (Armando), Ricardo Jaar (Ricardo), and Moises Saieh (Moises) (collectively, “the Individuals”). [23]
These appellants were all OFAC-designated SDNTs when Plaintiffs filed ex parte motions for writs of garnishment against their blocked assets under TRIA on September 7, 2011. Fifteen of the writs were issued to Terrabank as to accounts held by Ricardo, Armando, Moises, Carlos, Carmen, Abdala, Jacaria, Lord, MLA, Granada, Overseas, Villarosa, the Partnerships, and ALM. Five more were issued to OceanBank, N.A. as to accounts held by Carmen, Abdala, Moises, Carlos, Sunset, and ALM. One was issued to Wells Fargo, N.A. as to an account held by Jamce. After obtaining OFAC’s approval, Terrabank turned the contents of the accounts over to Plaintiffs’ attorneys without filing an answer to the writs on September 23, 2011. The other banks filed answers, but the court entered turnover judgments against them as to all writs. After judgment was entered, a number of motions were filed seeking relief from the judgments. The final orders on appeal here are an order discharging Terrabank, two turnover judgments, four orders denying Rule 60(b) motions [24] , and the denial of Jamce’s Rule 59(e) motion. The order discharging Terrabank and the first turnover judgment were not timely appealed, and we therefore do not have jurisdiction to consider them. Fed. R. App. P. 4(a). Thus, only the later-in-time turnover judgment (against Jamce’s Wells Fargo account), the denials of the Rule 60(b) motiоns, and the denial of Jamce’s Rule 59(e) motion are at issue here. [25]
Jamce appeals a turnover judgment entered against an account it held at
Wells Fargo. However, Jamce waived any opposition to Plaintiffs’ motion seeking
entry of judgment on the writ of garnishment when, after receiving notice of the
motion through counsel, it failed to timely respond to the motion. The day after
the district court entered the judgment, Jamce filed a Rule 59(e) motion, which the
district court denied, specifically noting the electronic notice provided. Jamce
appealed the judgment itself on the day it was issued and later amended the notice
of appeal to include the Rule 59(e) motion denial. Because Jamce waived
opposition to the motion seeking entry of judgment, we affirm the judgment.
Further, a Rule 59(e) motion cannot be used simply as a tool to reopen litigation
where a party has failed to take advantage of earlier opportunities to make its case.
Michael Linet, Inc. v. Vill. of Wellington
,
A number of the Individuals and Granada appeal the order denying their
Rule 60(b) motion to set aside the execution of the real property owned by the
Partnerships. In the denial, the district court held that they did not have standing
because they did not own the real property under Florida law. The appellants do
the court to do because the judgment was already executed.
Randolph
,
not challenge that determination here, and they have thus waived argument on that
issue.
Marek v. Singletary
,
On November 2, Carmen, Armando, Ricardo, Carlos, and Moises moved to quash the gаrnishment, to reconsider the order granting Plaintiffs’ motion for an issuance of writs of garnishment, for relief from judgment, to set aside the judgment, to stay the garnishment, and to deposit garnished funds into the court registry. On November 21, they also moved to alter judgment, to amend or correct the order on Plaintiffs’ motion for judgment, to stay execution, and to deposit garnished funds into the court registry. After the stay discussed above was lifted, the district court denied the motions on April 9 and 12, 2013, respectively. The Organizations brought a similar motion seeking relief on April 30, 2012, and the district court denied it on April 25, 2013.
The appeal of those remaining orders—all denying Rule 60(b) motions—
also fails. Contra the argument of these appellants, TRIA § 201 permits execution
against the assets of parties not named in the original lawsuit; that is the purpose of
the specific allowance for execution against agencies or instrumentalities provided
by that section.
Mercurio
,
The appellants’ arguments regarding an alleged denial of due process also lack merit because any such violation was harmless. As we concluded in the global discussion, no pre-deprivation hearing was warranted. Moreover, the appellants here had sufficient opportunities to present their arguments to the district court. Ultimately, the district court gave due consideration to these arguments.
The district court made the factual determination that each of the appellants in this appeal was an agency or instrumentality of FARC. Even if the appellants had given us reason to believe that that determination was clear error (they have not), they certainly do not give us reason to believe that such error is grounds for setting aside a judgment. The remaining grounds advanced by the appellants for reversing the district court are meritless, as detailed in the global discussion.
The turnover judgment as to Jamce’s property was properly entered after Jamce defaulted. The Rule 60(b) motions do not establish any grounds on which we may grant such extraordinary relief. We therefore affirm the orders from which this appeal is brought.
D. No. 13-12337 (Sutherlin)
Luis Sutherlin claims that Jamce is a trust, that he is its beneficiary, and that
he is thus entitled to challenge the execution of assets owned by Jamce. However,
the district court found that Jamce is a corporation. Sutherlin does not give us
reason to disturb that finding. Therefore, only Jamce has standing to challenge the
execution of its assets.
KMS Rest. Corp.
,
E. No. 13-12116 (Individual Claimants)
The appellants here appeal a series of turnover judgments for accounts in the names of Carmen, Carlos, Armando, and Moises at UBS AG, Bank of America (BOA), and HSBC Bank USA, N.A. (HSBC), as well as an order denying a Rule 59(e) motion. [26] All the appellants party to this appeal were SDNTs when Plaintiffs initiated garnishment proceedings against them. Significantly, the appellants made appearances in the district court after receiving notice of the garnishment proceedings and well before judgment was entered against them. First, they filed a motion to quash the writs of garnishment issued to UBS and BOA on November 2, 2011. Then, on February 12, 2013, they filed a brief opposing a lift of the stay. Finally, they filed multiple motions opposing entry of judgment.
As an initial matter, the district court’s denial of the Rule 59(e) motion on
jurisdictional grounds was not proper. The district court based that decision on
Griggs v. Provident Consumer Discount Co.
,
The appellants here first claim that their due process rights were violated by
the district court’s failure to provide them with notice and an opportunity to be
heard. Notwithstanding their complaints about lack of formal service, any failure
to provide notice was harmless because the appеllants received actual notice and
appeared. First, they filed a motion to quash the writs of garnishment issued to
UBS and BOA on November 2, 2011. Then, on February 12, 2013, they filed a
brief opposing a lift of the stay. Finally, they filed multiple motions opposing
entry of judgment. Therefore, because they appeared, the appellants were not
prejudiced by the lack of notice because they received actual notice.
Cf. Murphy v.
Travelers Ins. Co.
,
The Rule 59(e) motion does not save the appellants, either. We review
denials of Rule 59(e) motions for an abuse of discretion.
Thomas v. Farmville
Mfg. Co.
,
The appellants here also contend that they were improperly designated as agencies or instrumentalities. We have already determined that the district court applied the correct standard. Moreover, we cannot say that the district court clearly errеd in making the factual determination that they were agencies or instrumentalities of FARC. Plaintiffs proffered evidence of connections to FARC that met the district court’s standard, and the appellants here failed to rebut that evidence.
Finally, any other arguments raised do not support reversal. Therefore, we affirm the district court’s orders at issue in this appeal.
F. No. 13-12171 (Brunello)
Brunello, Ltd. is a Caymanian corporation that was designated a SDNT on November 8, 2006, for alleged ties to the NVC. It began the de-listing process soon after that. Plaintiffs moved for a writ of garnishment against BOA on September 15, 2011, where they believed Brunello held a blocked asset. The district court issued the writ on September 20, 2011. BOA answered the writ claiming that it was indebted to Brunello. On November 16, it amended the answer, disclaiming any debt owed to Brunello and informing the district court and Plaintiffs that Merrill Lynch, Pierce, Fenner & Smith, Inc., (Merrill Lynch) was indebted to Brunello. BOA had mistakenly reported to OFAC that it held an asset belonging to Brunello; Brunello actually held the account in question with Merrill Lynch. Both BOA and Merrill Lynch are wholly owned subsidiaries of Bank of America Corporation.
Meanwhile, Brunello had successfully challenged its OFAC designation, which was reflected in OFAC’s updated SDNT list, published on January 10, 2012. Brunello then moved to dissolve the writ of garnishment on January 23, 2013, asserting that BOA did not possess any of its assets. On January 29, while that motion was pending, Plaintiffs moved to amend the writ of garnishment to add Merrill Lynch as a party indebted to Brunello. Brunello filed its opposition to that motion on January 30, and, the next day, the district court denied Brunello’s motion to quash and granted Plaintiffs’ motion to amend. The clerk issued the amended writ on March 13. Merrill Lynch was served on April 8. The district court entered a turnover judgment against Merrill Lynch on May 6, and Brunello timely filed an appeal. While Brunello raises many of the same arguments discussed above, it uniquely asserts that the district court improperly related back, nunc pro tunc , the writ of garnishment. Because we agree with Brunello on that point, we reverse the turnover judgment and remand to the district court with instructions to quash the underlying writ of garnishment and return any turned over funds.
The purpose of a
nunc pro tunc
order is not “to revise history, but only to
correct inaccurate records.”
Justice v. Town of Cicero
,
A nunc pro tunc order merely recites court actions previously taken but not properly or adequately recorded. The failure of a court to act, or its incorrect action, can never authorize a nunc pro tunc entry. If a court does not render judgment or renders one which is imperfect or improper, it has no power to remedy any of these errors or omissions by treating them as clerical misprisions.
Cypress Barn, Inc. v. W. Elec. Co.
,
Here, the
nunc pro tunc
order substituted a new party that actually was
indebted to Brunello for one that was not. A
nunc pro tunc
order that has the effect
of retroactively inserting in a writ a garnishee who was never mentioned in the
original writ, was not a party to the proceedings, and was never served with the
original writ is perhaps the most obvious violation of the limitations on the
doctrine. Such an order does not “merely recite[] court actions previously taken
but not properly or adequately recorded,”
Cypress Barn
,
In response to Brunello’s argument that the nunc pro tunc order was entered improperly, Plaintiffs allege that the garnishee originally named in the writ, BOA, answered the writ in a “misleading” fashion and engaged in “questionable conduct.” Assuming that claim is true, it is irrelevant. The proper garnishee was a completely separate entity. [27] It is immaterial that both garnishees were owned by the same entity or that BOA may have misled Plaintiffs.
Thus, the motion for a writ of garnishment against Merrill Lynch was filed
on the date it was filed, not the date on which the writ against BOA was filed,
which came after Brunello’s de-listing. For that reason, TRIA § 201’s requirement
that the subject asset is “blocked” was not met as a matter of law.
Holy Land
Found.
,
IV. Conclusion
In the proceedings below, it seems no party was free of fault. Plaintiffs should have provided formal notice of the garnishment and execution proceedings to the owners of the property, as Florida law provides. Initially, the district court incorrectly concluded that no process was due to the owners of property here, none of whom could be deemed to be on notice of the underlying proceedings against FARC. Ultimately, though, Claimants bear their share of the blame for either sitting on their rights to challenge the allegations against them or simply failing to rebut the charges. Therefore, with the exception of the turnover judgment against Brunello’s account, we affirm the district court.
AFFIRMED IN PART; DISMISSED IN PART; REVERSED AND REMANDED IN PART.
Notes
[1] This provision is codified as a note to 28 U.S.C. § 1610. For ease of reference and familiarity, we will cite to TRIA § 201, with accompanying subsections where appropriate.
[2] Designees under the IEEPA include those found by OFAC [t]o play a significant role in international narcotics trafficking centered in Colombia; . . . [m]aterially to assist in, or provide financial or technological support for or goods or services in support of, the narcotics trafficking activities of [SDNTs]; [or] to be owned or controlled by, or to act for or on behalf of, any other [SDNT]. 31 C.F.R. § 536.312(b) and (c).
[3] For the sake of clarity, we will cite this opinion hereinafter as
Mercurio
,
[4] As an additional tool for clarity, we will use “Claimants” when referring to all claimant- appellants collectively and “appellant(s)” when referring to a subset of them.
[5] Those subsections define the citizenship of corporations and legal representatives of estates, infants, or incompetents.
[6] The district court defined an agency or instrumentality as Any SDNT . . . , including all of its individual members, divisions and networks, that is or was ever involved in the cultivation, manufacture, processing, purchase, sale, trafficking, security, storage, shipment or transportation, distribution of FARC coca paste or cocaine, or that assisted the FARC’s financial or money laundering network, . . . because it was either: (1) materially assisting in, or providing financial or technological support for or to, or providing goods or services in support of, the international narcotics trafficking activities of . . . [FARC]; and/or (2) owned, controlled, or directed by, or acting for or on behalf of, . . . [FARC]; and/or (3) playing a significant role in international narcotics trafficking [related to coca paste or cocaine manufactured or supplied by the FARC].
[7]
Helicopteros
dealt with due process protections afforded by the Fourteenth Amendment.
[8] In
Bonner v. City of Prichard
,
[9] We disagree with the conclusion that the right to challenge the OFAC designation provided a sufficient safeguard for Claimants and their property. Some Claimants had commenced proceedings seeking de-listing when turnover judgments were entered against them. For those Claimants who eventually succeeded in their challenges, the district court correctly ruled that de-listing did not apply retroactively, and the de-listed Claimants were unable to attain relief with respect to those assets already executed. It cannot be that available de-listing procedures were effective due process bulwarks where a party can be listed, its assets blocked, and TRIA execution procedures begun—thus rendering future de-listing ineffective—before the party receives notice of the designation or blockage.
[10] In Doehr , the Supreme Court applied the Mathews analysis to a deprivation initiated by a private party. See501 U.S. at 11–16,111 S. Ct. at 2112–15. Under such circumstances, when assessing the third prong of the Mathews test, courts must give “principal attention to the interest of the party seeking the prejudgment remedy, with, nonetheless, due regard for any ancillary interest the government may have in providing the procedure or forgoing the added burden of providing greater protections.” Id. at 11,111 S. Ct. at 2112 . Therefore, we consider the private party’s interests in the specific attachment as well as the government’s interests affected by “financial or administrative burdens involving predeprivation hearings.” id. at 16, 111 S. Ct. at 2115. We also assess the government’s “substantive interest in protecting any rights of the plaintiff [, which] cannot be any more weighty than those rights themselves.” Id. (emphasis added). Because we consider the government’s interest “in providing the procedurе,” we properly consider TRIA judgment creditors’ ability to collect generally, not just that of Plaintiffs here.
[11] At the same time, it is relevant that the burden accompanying attachment under TRIA is no more substantial than the already-existing burden of blockage. In other words, attachment under TRIA is less burdensome than, for example, pre-hearing seizure of an asset.
[12] And this is a generous interpretation of the final clause of § 1603(b)(3). The “third country” element uses as a reference the “foreign state or political subdivision thereof” of which the party is purported to be an organ or by which it is purported to be owned. Where the agency or instrumentality’s parent is not a foreign state or its subdivision, the mention of a third country would be illogical or inapplicable. At best, it could be explained as effectively making every country a “third country.” Under such an interpretation, all organizations created under the laws of any country are created under the laws of a third country and thus excluded from the definition of an agency or instrumentality. Moreover, the rationale of the third country exception “is that if a foreign state acquires or establishes a company or other legal entity in a foreign country, such entity is presumptively engaging in activities that are either commercial or private in nature,” rendering that entity unprotected by the principle of sovereign immunity for purposes of the FSIA. H.R. Rep. No. 94- 1487, at 15 (1976), reprinted in 1976 U.S.C.C.A.N. 6604, 6614. The flipside is that, when a foreign state establishes a legal entity under its own laws, it seeks to engage in the “public, non- commercial activity” which the FSIA protects. This rationale is inapplicable to TRIA § 201, providing further support for the inapplicability of § 1603(b) to TRIA § 201.
[13] At the same time, it is not proper for the district court to rely solely on OFAC designation as creating an irrebuttable presumption of agency or instrumentality status. The agency or instrumentality determination is separate from the blocked asset determination. The
[14] As discussed below, the licensing requirement does not affect the outcome of Herrera’s appeal.
[15] Because Plaintiffs and their counsel acted in good faith throughout the proceedings, the
appellant’s motion for sanctions pursuant to 28 U.S.C. § 1927 in Appeal No. 13-11339 is denied.
Amlong & Amlong, P.A. v. Denny’s, Inc.
,
[16] Herrera was designated under the Kingpin Act and the Kingpin Regulations. The Kingpin Act permits designation of foreign persons materially assisting in, or providing financial or technological support for or to, or providing goods or services in support of, the international narcotics trafficking activities of a significant foreign narcotics trafficker . . . ; . . . owned, controlled, or directed by, or acting for or on behalf of, a significant foreign narcotics trafficker . . . ; . . . [or] playing a significant role in international narcotics trafficking. 21 U.S.C. § 1904(b)(2)–(4); see also 31 C.F.R. § 598.314(b). OFAC did not specify on which of these grounds it based its decision to designate Herrera. Although TRIA § 201(d)(2)(A) does not expressly list assets blocked pursuant to the Kingpin Act among those assets subject to execution or attachment pursuant to TRIA § 201, the district court held that those assets were in fact subject to execution or attachment because “[t]he Kingpin Act . . . was enacted pursuant to Congressional findings and authority arising from the [IEEPA].” We later held that execution or attachment under TRIA § 201 does not include those assets blocked under the Kingpin Act and is
[17] And we merely assume this for purposes of this analysis. It is not difficult to imagine that Herrera would be able to find an attorney who would file a notice of appeal before the deadline, a Federal Rule of Appellate Procedure 4(a)(6) request for reopening the time to file an appeal, or a Rule 60(b) motion immediately upon learning of the judgment against Herrera at least to keep Herrera’s opportunity to seek redress from spoiling while the license application was pending.
[18] The writ as to Plainview’s account was issued in error because it was never a SDNT. Plaintiffs resolved the matter by returning the amount in Plainview’s account to Plainview.
[19] The district court found that the NVC’s “OFAC designated member organizations, partners, affiliates, and/or money laundering financial network members, are all agencies or instrumentalities of the FARC, [including] the Terrabank, N.A. SDNT account holders who are all OFAC designated members, affiliates, front persons, or entities within the [NVC].”
[20] The Mercurio appeal concerned TRIA execution against a SDNT that had been designated by OFAC under the Kingpin Act. Because the Partnerships had been designated under the IEEPA, the district court allowed garnishment against them and other IEEPA- designated SDNTs to continue.
[21] For an order to be appealable, it must be final. 28 U.S.C. § 1291. Writs of
garnishment and orders denying relief from such writs are not appealable; typically, there is no
appellate jurisdiction until the district court enters an order directing the disposition of the
property.
United States v. Branham
,
[22] We can also infer that the Partnerships received notice of the garnishment proceedings against their accounts because their motion seeking relief from the real property execution also challenged the writs of garnishment.
[23] Some of the Individuals have asserted standing to challenge the writ of garnishment
issued to Wells Fargo as to Jamce, claiming that Jamce was a trust and that they were its
beneficiaries. The district court rejected that assertion, finding that Jamce was a corporation.
KMS Rest. Corp. v. Wendy’s Int’l, Inc.
,
[24] The Rule 60(b) motions were also filed pursuant to Rules 59(e) and 69(a)(1). The
district court correctly declined to consider the motions under Rule 59(e) because they were not
timely filed. Fed. R. Civ. P. 59(e);
Wright v. Preferred Research, Inc.
,
[25] For an order to be appealable, it must be final. 28 U.S.C. § 1291. With respect to the
writs issued to OceanBank and Wells Fargo, finality was accomplished when the district court
entered turnover judgments against them after receiving their answers to the writs. Writs of
garnishment and orders denying relief from such writs are not appealable; typically, there is no
appellate jurisdiction until the district court enters an order directing the disposition of the
property.
Branham
,
[26] They also appeal an order denying relief from a writ of garnishment issued to BOA as to an account held by Brunello. We address that writ and the associated turnover judgment below.
[27] The district court did not determine that BOA and Merrill Lynch were alter egos.