Flatow v. The Islamic Republic of Iran

Flatow v. The Islamic Republic of Iran

The United States moves to quash the writ of attachment
issued by the Clerk of this court on February 23, 2000, by
which plaintiff purports to attach “all property, trusts,
credits or assets of any type whatsoever of either defendant.
. . being held by the United States of America under the
jurisdiction of the Department of Defense.” Upon consideration
of the United States’ motion, the opposition thereto, the
applicable law, and for the reasons set forth below, the court
hereby GRANTS the United States’ motion and the writ of
attached is QUASHED.

Background

The present matter represents another effort by plaintiff
Stephen M. Flatow to execute the judgment he obtained against
the Islamic Republic of Iran under the Foreign Sovereign
Immunities Act (“FSIA” ), 28 U.S.C. § 1602-11 (1996 and Supp.
1999), for the wrongful death of his daughter Alisa, who was
killed in a 1995 terrorist bombing of a tourist bus in Gaza.
See Flatow v. The Islamic Republic of Iran, et al., 999 F.
Supp. 1, 5 (D.D.C. 1998)(entering default judgment against
Iran and its codefendants and finding them jointly and
severally liable for compensatory damages, loss of accretions,
solatium and $225,000,000.00 in punitive damages). Thus, far,
each of Flatow’s previous attempts to satisfy his judgment
against Iran have proven fruitless. See, e.g., Flatow v.
Islamic Republic of Iran, et al., 76 F. Supp.2d 16, 18 (D.D.C.
1999)(quashing writs of attachment directed against Iranian
real estate in Washington, D.C., including the former Iranian
embassy, and two bank accounts containing funds generated by
the State Department’s lease of such properties to third
parties); Flatow v. Islamic Republic of Iran, et al., 76 F.
Supp.2d 28, 29 (D.D.C. 1999) (quashing writ of attachment
directed at arbitration award issued by Iran-United States
Claims Tribunal in favor of Iran against garnishee); Flatow v.
Islamic Republic of Iran, et al., 74 F. Supp.2d 18, 25 (D.D.C.
1999)(quashing writ of attachment issued to the United States
Treasury, directed at “all credits held by the United States
to the benefit of the Islamic Republic of Iran” ); Flatow v.
Islamic Republic of Iran, et al., 67 F. Supp.2d 535, 543 (D.
Md. 1999) (quashing writs of execution against nonprofit
foundation’s property). The present writ of attachment is
directed to the Secretary of Defense and purports to attach
the “property of the Defendants, The Islamic Republic of Iran
and/or The Iranian Ministry of Information and Security . . .
, which is believed to be in the possession, care, custody,
held in trust, or otherwise within the control and/or
jurisdiction of the United States Department of Defense,”
including defendants’ Foreign Military Sales Accounts (“FMS” ),
all accounts related to such FMS Accounts, and all accounts,
property, credits, or “assets of any type whatsoever.” Writ
of Attachment on Judgment, Exh. A, United States Motion to
Plaintiff’s Quash Writ of Attachment and For Interim Relief
(“Motion to Quash” ), March 22, 2000.
By way of background, the Foreign Military Sales, or FMS,
program is governed by the Arms Export Control Act, 22 U.S.C.
§§ 2751 et seq., under which the President and the Department
of Defense enter into agreements with eligible foreign
governments and International Organizations to sell defense
articles and services. Declaration of A. Robert Keltz (“Keltz
Decl.” ),¶ 4, Exh. B, Motion to Quash. Sales of such articles
or services can either be from Defense Department stock or
procurements, whereby the U.S. government contracts with third
parties for the supply of the goods and services. Id.
Receipts from FMS customers are credited to the FMS Trust Fund
(“FMS Fund” ), whose funds are on deposit in the United States
Treasury pursuant to the Arms Export Control Act. Id. at ¶7.
The FMS Fund contains the aggregated receipts for all FMS
customers. Id. To track each FMS customer’s deposits,
collections, payments, refunds and adjustments, however, the
FMS Fund is separated at the country or customer level into
183 accounts. Id.

At the end of the 1970s, Iran had one of the largest FMS
programs with the United States. Yet, in 1978 and 1979, Iran
began to fall behind in its payments. By February 1979, Iran
restructured its program and canceled orders for major weapons
systems and other FMS orders. And, on November 4, 1979, the
U.S. Embassy and hostages were taken in Iran. Subsequently,
on November 19, Iranian officials repudiated Iran’s foreign
obligations. Since that time, the United States has continued
to credit and/or debit the FMS Fund with funds received or
disbursed on behalf of other FMS program participants. Id. at
¶ 12.
Notwithstanding its earlier repudiation of its foreign
obligations, however, in 1981, Iran filed billions of dollars
of claims against the United States based on the FMS program
in the Iran-U.S. Claims Tribunal. In response, the United
States counterclaimed Iran for $817 billion for its failure to
safeguard certain FMS equipment under the terms of their
agreements. Id. These claims continue to be litigated before
the Tribunal. According to the United States, it is unknown
how much, if any of Iran’s FMS account, which has an estimated
current cash balance of approximately $400 million, will be
owed to Iran by the United States until the Tribunal claims
are resolved. In the meantime, however, the Defense
Department continues to make disbursements and accounting
adjustments from the Iran FMS account for items procured from
contractors, storage costs and account reconciliation costs
for 11 FMS cases. Id. at ¶ 14.

Discussion

In moving to quash this writ of attachment, the United
States advances three principle arguments. First, the United
States maintains that the present writ of attachment is barred
by the “law of the case” doctrine. See Flatow v. Islamic
Republic of Iran, et al., 74 F. Supp.2d 18, 19 (D.D.C. 1999)
(quashing writ of attachment directed to the United States
Treasury and “all credits held by the United States to the
benefit of the Islamic Republic of Iran” ). Alternatively, the
United States asserts that even if the fate of the instant
writ is not already determined by the law of the case, the
doctrine of sovereign immunity operates as a jurisdictional
bar. Finally, the United States challenges the current writ
on procedural grounds, contending it does not conform to the
requirements of Rule 69(a) or Rule 4.1(a) of the Federal Rules
of Civil Procedure.

In response, plaintiff argues that law of the case does
not apply in this instance because the court’s previous
opinion only addressed the question of whether the United
States had waived its sovereign immunity for “blocked” assets
in the possession of the United States Treasury. Yet
plaintiff advances that the issue presented here- whether
plaintiff can attach Iranian property (the FMS funds) held “in
trust” in the U.S. Treasury by the United States-is different.
Similarly, plaintiff asserts that sovereign immunity does not
bar this suit because the FMS funds constitute Iranian
property, not United States property, and Iran’s immunity has
been “except[ed]” by Section 1610(a)(7) of the FSIA. Lastly,
plaintiff contends that the writ was not procedurally
defective under the applicable Federal Rules of Civil
Procedure.

The court agrees with the United States that the present
writ of attachment is barred by law of the case. Finding the
writ improper on those grounds, the court need not address the
United States’ alternative bases for quashing the writ. As
the United States correctly notes, this court’s prior decision
quashing plaintiff’s writ directed at “all credits held by the
United States to the benefit of the Islamic Republic of Iran”
disposes of the present writ as well. In that opinion, the
court held that because plaintiff had failed to identify an
unequivocal waiver, the writ of attachment against the U.S.
Treasury was barred by sovereign immunity as a suit against
the United States. Flatow, 74 F.Supp.2d at 22 (finding that
funds were held in U.S. Treasury and that their attachment
constitutes a suit against the United States, which is barred
by sovereign immunity absent “an explicit, unequivocal
waiver” ). In so holding, the court specifically noted that
controlling authority has determined that a creditor’s
attachment or garnishment action against the U.S. Treasury
constitutes a suit against the United States that is barred by
the doctrine of sovereign immunity, absent an effective
waiver. Flatow, 74 F. Supp.2d at 21 (citing, inter alia,
Department of the Army v. Blue Fox, 525 U.S. 255 (1999);
Buchanan v. Alexander, 45 U.S. (How.) 20 (1846); and Arizona
v. Bowsher, 935 F.2d 332, 334 (D.C. Cir. 1991)). Here, it is
undisputed that the present writ seeks to attach funds that
are held in the U.S. Treasury. Thus, contrary to plaintiff’s
assertions, the issue presented by the current writ is on all
fours with that posed by the previous writ. Thus, the
principle of law of the case, which ensures that “the same
issue presented a second time in the same case in the same
court should lead to the same result,” dictates that this writ
also be quashed. LaShawn A. v. Barry, 87 F.3d 1389, 1393
(D.C. Cir. 1996)(en banc). Accordingly, plaintiff’s writ of
attachment directed at Iranian FMS funds held in the U.S.
Treasury must be quashed.

Conclusion

For the reasons set forth above, it is hereby
ORDERED that the United States’ Motion to Quash
Plaintiff’s Writ of Attachment is GRANTED; and it is further
ORDERED that the writ of attachment is QUASHED.

See Also

Notes

References and Further Reading

About the Author/s and Reviewer/s

Author: international

Mentioned in these Entries

Commercial arbitration: U.S. Cases applying New York Convention 1958, Foreign Sovereign Inmunity Act, International Organizations, John Rawls and the Islamic Constitutional model, List of International Business Law Landmark Cases, List of International Business Law Selected Cases, by Subject, country.


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