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Hegna v. Islamic Republic of Iran

June 17, 2005

EDWENA R. HEGNA, ET AL., PLAINTIFFS,
v.
ISLAMIC REPUBLIC OF IRAN, ET AL., DEFENDANTS.



The opinion of the court was delivered by: William W Schwarzer Senior United States District Judge

MEMORANDUM OPINION AND ORDER

On July 21, 2003, on the motion of Plaintiffs Edwena R. Hegna and her children, Steven A. Hegna, Craig M. Hegna, Lynn Marie Hegna Moore, and Paul B. Hegna (the Hegnas), the district court (White, J.) issued a Writ of Execution pertaining to property located at 3400 Washington Street in San Francisco and owned by Defendant Islamic Republic of Iran. On November 19, 2003, the United States Marshals Service levied on the Writ by posting the property. On December 1, 2003, the United States, custodian of the property, moved to quash the Writ and void the levy on the ground that following the issuance of the Writ the Hegnas relinquished all of their rights to execute against or attach the property. The Hegnas oppose the motion and have filed a motion to strike parts of two declarations the United States offered in support of its motion. The parties have stipulated to waive oral argument. For the reasons stated below, the Court grants the United States' motion to quash and rejects the Hegnas' objections to evidence.

BACKGROUND

I. STATUTORY BACKGROUND

Under the Foreign Sovereign Immunities Act (FSIA), foreign states are generally "immune from the jurisdiction of the courts of the United States and of the States." 28 U.S.C. § 1604. In 1996, as part of the Antiterrorism and Effective Death Penalty Act (AEDPA), Congress created an exception to this immunity for states sponsoring terrorist organizations.

28 U.S.C. § 1605(a)(7). In 1984, then-Secretary of State George Shultz had designated the Islamic Republic of Iran a state sponsor of terrorism. See 49 Fed. Reg. 2836-02 (Jan. 23, 1984).

In 2000, Congress enacted the Victims of Trafficking and Violence Protection Act (VPA). Pub. L. No. 106-386, § 2002, 114 Stat. 1464, 1541 (2000). The VPA authorized certain parties who had secured judgments under § 1605(a)(7), upon application, to receive payment in satisfaction of their judgments from the Secretary of the Treasury, provided the judgment creditors relinquished certain rights to pursue other avenues to satisfaction of their judgments. VPA § 2002(a)(2).

In 2002, Congress amended the VPA by enacting the Terrorism Risk Insurance Act (TRIA). Pub. L. No. 107-297, § 201, 116 Stat. 2322 (2002). TRIA expanded the group of plaintiffs authorized to receive satisfaction of their judgments. TRIA § 201(c). TRIA also reflects the recognition that funds set aside by the United States to pay these plaintiffs might not be sufficient to satisfy all qualifying plaintiffs' judgments. The amendment expressly permits certain successful plaintiffs to attach and execute against the "blocked assets" of terrorist parties to satisfy qualifying judgments. Id. § 201(a). TRIA defines a "blocked asset" to include "any asset [of a state sponsor of terrorism] seized or frozen by the United States" under certain statutes but excludes from the definition "property subject to the Vienna Convention on Consular Relations . . . that . . . is being used exclusively for . . . consular purposes." Id. § 201(d)(2). Alternatively, TRIA provides that successful plaintiffs may receive from the Secretary of the Treasury direct pro rata payment of their compensatory damage awards. Id. § 201(c). But plaintiffs receiving such payment must, as a condition of receiving even "less than the full amount of" payment, id. § 201(c), relinquish any claim to punitive damages, id.

§ 201(c); VPA § 2002(a)(2)(C), as well as "all rights to execute against or attach property that is at issue in claims against the United States before an international tribunal," TRIA § 201(c); VPA § 2002(a)(2)(D).

II. FACTUAL BACKGROUND

Plaintiffs are the widow and surviving children of Charles Hegna, an American killed in a 1984 plane hijacking. The hijacking was committed by Hezbollah, a terrorist group sponsored by the Islamic Republic of Iran and the Iranian Ministry of Information and Security (collectively, Iran). Plaintiffs sued Iran in the United States District Court for the District of Columbia under 28 U.S.C. § 1607(a)(7), seeking damages for Charles Hegna's death. In 2002, that district court entered a default judgment in the Hegnas' favor for $42 million in compensatory damages and $333 million in punitive damages. See Mem. Op., Hegna v. Islamic Republic of Iran, No. 00-00716 (HHK), 2002 U.S. Dist. LEXIS 27544 (D.D.C. Jan. 22, 2002).

The Hegnas subsequently pursued attempts to obtain satisfaction of this judgment under TRIA § 201(a) through attachment of Iranian real property in several cities across the country, including San Francisco. Before 1980, Iran had used the properties in question as residential property for diplomatic, consular, and political personnel. In 1980, the United States severed diplomatic relations with Iran and took custody of all Iranian diplomatic and consular real property. See Decl. of Francis X. Taylor ¶¶ 6, 14-15. Arguably, the properties pursued by the Hegnas then became "blocked assets" subject to attachment under TRIA § 201(a). Currently, all of the property in question is managed and leased, and the rental proceeds retained, by the United States. None of the action taken by the Hegnas against this property, however, has resulted in satisfaction of their judgment; in each case, the writ of execution the Hegnas have sought has been either denied or quashed on the United States' motion. See Hegna v. Islamic Republic of Iran, 402 F.3d 97 (2d Cir. 2005) (addressing attempts to attach property in New York City); Hegna v. Islamic Republic of Iran, 380 F.3d 1000 (7th Cir. 2004) (addressing attempts to attach properties in Chicago); Hegna v. Islamic Republic of Iran, 376 F.3d 485 (5th Cir.) (addressing attempts to attach properties in Houston and Lubbock, Texas), reh'g and reh'g en banc denied, 121 Fed. Appx. 59, ___ F.3d ___, 2004 WL 2255334 (5th Cir. 2004); Hegna v. Islamic Republic of Iran, 376 F.3d 226 (4th Cir. 2004) (addressing attempts to attach property in Bethesda, Maryland); Hegna v. Islamic Republic of Iran, No. 00-00716 (HHK), 2004 U.S. Dist. LEXIS 15947 (D.D.C. Mar. 22, 2004), aff'd, 2005 U.S. App. LEXIS 7062 (D.C. Cir. Apr. 22, 2005) (addressing attempts to attach property in the District of Columbia).

In March 2003, while the above litigation was under way, the Hegnas also applied for direct payment of part of their compensatory damages award under TRIA § 201(c). They do not dispute that on or around July 29 and November 13, 2003, pursuant to this application, they received from the United States payments totaling at least $8 million.

Just before the first of these payments, on July 21, 2003, the district court for the Northern District of California (White, J.), upon the Hegnas' application, issued a writ of execution on property located at 3400 Washington Street in San Francisco and formerly used as the residence for the Consul General of Iran in San Francisco. See Notice of Issuance of Writ of Execution, No. FJ 03-00038 JSW (N.D. Cal. Mar. 25, 2004); U.S. Mot. to Quash at I. The Hegnas contend that this Writ was delivered to the United States Marshal on August 11, 2003, but that the Marshal, at the direction of counsel for the Marshals Service, refused to levy it on the property until November 19, 2003, despite the Hegnas' requests. Pls.' Opp'n at 20. ...


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