The opinion of the court was delivered by: VICTOR Marrero, United States District Judge
A. THE WEININGER JUDGMENT ..... 3
B. THE McCARTHY JUDGMENT ..... 9
C. JPM CHASE'S CROSS-MOTION FOR RELIEF IN THE NATURE OF INTERPLEADER ..... 12
II. STANDARD OF REVIEW ..... 13
A. ENFORCEABILITY OF THE WEININGER AND McCARTHY JUDGMENTS ..... 18
1. The Full Faith and Credit Doctrine .....21
2. Recognition by Other Courts ..... 36
B. TRIA SECTION 201(a) ..... 37
1. Subject Matter Jurisdiction ..... 38
2. TRIA § 201(a) ..... 41
a. A Judgment Against a Terrorist Party ..... 42
b. A Claim Based on an Act of Terrorism Or a Claim for Which the Terrorist Party Is Not Immune under § 1605(a)(7) ..... 43
c. Blocked Assets ..... 45
d. Compensatory Damages ..... 45
e. Execution Upon the Assets of an Agency or Instrumentality of a Terrorist Party ..... 46
(i) Placing TRIA in Context in the FSIA ..... 47
(ii) The Effect of TRIA upon Bancec ..... 52
3. Subject Matter Jurisdiction through Ancillary Jurisdiction ..... 65
4. Personal Jurisdiction ..... 69
5. Whether the Assets Belong to Agencies or Instrumentalities of Cuba ..... 77
i. The EMTELCUBA Account ...... 78
ii. The AT&T Long Lines Account ...... 83
iii. The Rabinowitz Boudin Account ..... 84
C. TURNOVER PURSUANT TO CPLR § 5225(b) ..... 89
D. JPM CHASE'S MOTION FOR INTERPLEADER RELIEF ..... 91
1. Interpleader Relief ..... 91
2. Attorney's Fees and Costs ..... 95
Plaintiffs Janet Ray Weininger ("Weininger") and Dorothy Anderson McCarthy ("McCarthy") (collectively, "Plaintiffs") each filed motions for partial summary judgment for turnover orders pursuant to Federal Rules of Civil Procedure 13 and 69 and New York Civil Practice Law and Rules ("CPLR") § 5225(b). Defendant JPMorgan Chase Bank, N.A. ("JPM Chase") opposed Plaintiffs' motions for summary judgment and cross-moved for discharge in interpleader, as well as discharge pursuant to CPLR §§ 5209 and 5239.*fn1 Adverse claimant-respondents AT&T Corp. ("AT&T") and Cuban American Telephone and Telegraph Company ("CATT"), a wholly-owned subsidiary of AT&T, opposed JPM Chase's cross-motion for discharge in interpleader to the extent that such motion requested discharge of funds that AT&T and CATT claimed were the sole property of AT&T and/or CATT. The Court has reviewed the submissions from Plaintiffs, JPM Chase, AT&T and CATT, the amicus curiae submission from the Cuban Electric Company ("CEC"), and a letter dated January 6, 2006 from the U.S. Department of Justice, expressing the position of the United States in this matter.*fn2
Plaintiffs seek an order directing turnover of certain funds held by garnishees JPM Chase and Rabinowitz, Boudin, Standard, Krinsky & Lieberman, P.C., ("Rabinowitz Boudin") (collectively, "Garnishees"). Specifically, Plaintiffs seek turnover of funds in the following accounts: (i) AT&T Long Lines (Account No. G00875) (hereinafter the "AT&T Long Lines Account") (of which CATT claims ownership of $6,332,843.49, which amount (and interest thereon) has been voluntarily exempted by Petitioners from the scope of the requested order); (ii) Rabinowitz Boudin Republic of Cuba (Account No. 092-6371190) (hereinafter the "Rabinowitz Boudin Account"); and (iii) Empresa de Telecomunicaciones de Cuba (Account No. 395-507995) (hereinafter the "EMTELCUBA Account") (collectively the "Accounts").*fn3 The funds sought were blocked by the United States pursuant to the Cuban Assets Control Regulations ("CACR"), 31 C.F.R. Part 515, as authorized by Trading with the Enemy Act, 50 U.S.C. App. §§ 1-44, as sanctions against Cuba in response to the expropriation of Americans' property in Cuba.
None of the judgment debtors has appeared at any stage of these proceedings. Additionally, Rabinowitz Boudin has not appeared in this action.
A. THE WEININGER JUDGMENT
Weininger, invoking amendments to the Foreign Sovereign Immunities Act ("FSIA") that removed the immunity of foreign countries from suits in United States courts for certain state-sponsored wrongful conduct, see 28 U.S.C. § 1605(a)(7), obtained a default judgment in Florida state court against the Republic of Cuba, Fidel Castro, Raul Castro, and the Army of the Republic of Cuba. Weininger's Florida action was grounded on the death of her father, Thomas Willard Ray, who was killed by Cuban soldiers during events surrounding the Bay of Pigs invasion by Cuban exiles and their supporters in 1961. Weininger's default judgment was rendered by the Circuit Court for the Eleventh Judicial Circuit in and for Miami-Dade County (the "Florida Circuit Court") on June 15, 2005. See Weininger v. Castro, No. 03-22920 CA 20 (Fla. Cir. Ct., 11th Cir., Miami-Dade Cty., June 15, 2005) ("Weininger Judgment") (attached as Ex. B to Perkins Decl.). The amount of compensatory damages awarded by Weininger's judgment is $23,939.301.95, including interest through December 27, 2005.
Weininger commenced the instant litigation in state court by seeking summary judgment in lieu of complaint to domesticate the Florida state court judgment. On August 1, 2005, Weininger obtained an attachment order in New York State Supreme Court, New York County, directing the Sheriff of the City of New York to levy upon property held at JPM Chase as Garnishee in which the judgment debtors have an interest, naming specifically the three accounts mentioned above. On or about August 4, 2005, the sheriff levied upon JPM Chase, and in response, on August 11, 2005, JPM Chase served its garnishment statement pursuant to CPLR § 6219. In that statement, JPM Chase indicated that none of the accounts on its books had been opened in the name of any of the judgment debtors, but that the three specified accounts represented deposit debts owed to "agencies or instrumentalities" of the Republic of Cuba, and that the Republic of Cuba "may have an indirect or contingent interest" in the accounts. (Letter from JPM Chase to Sheriff, dated Aug. 11, 2005 ("JPM Chase Garnishee Statement"), attached as Ex. A to Perkins Decl.) JPM Chase further indicated that all such accounts were blocked pursuant to the Cuba Assets Control Regulations, 31 C.F.R. Part 515.
JPM Chase removed the action to federal court on August 12, 2005, and on September 8, 2005 filed a third-party petition for interpleader relief against Weininger, McCarthy, and various other parties whom JPM Chase alleged may have an interest in the accounts. In particular, JPM Chase named (1) Rabinowitz Boudin in its capacity as alleged fiduciary in respect of the blocked Rabinowitz Boudin Account; (2) Banco Nacional de Cuba ("Banco Nacional"); (3) Empresa Cubana Exportadora de Alimentos y Productos Varios ("CUBAEXPORT"); (4) Empresa de Telecomunicaciones Internacionales de Cuba ("EMTELCUBA"); (5) Empresa de Radiocomunication y Difusion de Cuba ("RADIOCUBA"); (6) Empresa de Telecomunicaciones de Cuba SA ("ETECSA") (7) AT&T; and (8) CATT.*fn5 JPM Chase served a summons, notice of petition and third-party petition on each of these adverse claimants. AT&T and CATT were served pursuant to agreement with counsel. (See Kerr Suppl. Decl. ¶¶ 19, 36.) Rabinowitz Boudin was served by hand on October 5, 2005. (See Kerr Suppl. Decl. ¶¶ 17, 34.) After being served with JPM Chase's interpleader petition, Rabinowitz Boudin twice requested additional time to respond, first until October 31, 2005, then until November 4, 2005, and the parties so stipulated. (See Kerr Suppl. Decl. ¶¶ 18, 35.) To date, no response has been made by Rabinowitz Boudin to JPM Chase's petition.
JPM Chase served the alleged agencies and instrumentalities of Cuba, or entities sited only in Cuba (such as ETECSA), pursuant to § 1608(b)(3)(B) of the FSIA by causing the summons, notice of petition, and third-party petition, in English and Spanish, to be sent by the Clerk of Court by registered mail, return receipt requested, for delivery by the United States Postal Service. (See Kerr Suppl. Decl. ¶¶ 7-11, 26-29.) JPM Chase indicates that it supplemented this service, at least with respect to Banco Nacional, ETECSA, and RADIOCUBA, by DHL Worldwide Express through the Clerk of Court. (See Kerr Suppl. Decl. ¶¶ 13-16, 30-33, Exs. A(6), A(7), A(8), B(5), B(6), B(7), attached to same.)
JPM Chase also served these papers on the defendants in the underlying Weininger and McCarthy actions -- i.e., the Republic of Cuba, Fidel Castro, Raul Castro, and the Army of the Republic of Cuba -- by causing the summons, notice of petition, and third-party petition in English and Spanish to be sent by the Clerk of Court by registered mail, return receipt requested, for delivery by the United States Postal Service. (See Kerr Suppl Decl. ¶¶ 7, 12, 25, 29, Exs. A(4), A(5), B(3), B(4)). From the Supplemental Declaration alone it is unclear whether JPM Chase also served these judgment debtors by DHL: the exhibits indicate that JPM Chase requested that the Clerk of Court effect DHL service upon the defendants in the underlying action, and that DHL service was made upon "Ministerio de Relaciones Exteriores, Attention: Felipe Perez Rogue, Ministro," but it is unclear which of the named judgment debtors or other agencies and instrumentalities this service may refer to. (See Kerr Suppl. Decl. ¶¶ 13-16, 30-33, Exs. A(6), A(7), A(8), B(5), B(6), B(7), attached to same.) However, the Court notes that JPM Chase has attempted to effect service of all papers in this litigation upon these judgment debtors by addressing these judgment debtors at such address.
Weininger commenced a proceeding in this Court on November 2, 2005 against JPM Chase seeking turnover of the funds pursuant to the order of attachment. Weininger does not indicate that she served the judgment debtors with these papers pursuant to the FSIA, but instead provided notice according to CPLR § 5225(b) by serving copies by DHL. (See Perkins Decl. ¶ 12.) By Order dated December 13, 2005, this Court consolidated Weininger's attachment proceeding that had been removed to this court, Chase's third-party petition, Weininger's turnover proceeding, and McCarthy's petition described below. By consent of the parties, Weininger's turnover petition was deemed, pursuant to Federal Rules of Civil Procedure 13 and 18, to have been filed as a counterclaim to JPM Chase's third-party petition for interpleader relief.
In addition, by Order dated December 13, 2005, this Court granted Weininger's motion for summary judgment in lieu of complaint domesticating the Florida state court judgment in New York, ordering that Weininger's Florida judgment, "including all of the findings of fact and conclusions of law therein, ... is entitled to full faith and credit in New York" and directing the Clerk of Court to enter judgment as provided in the Florida judgment. (Docket No. 71.) On December 27, 2005, this Court entered a writ of execution with respect to Weininger's judgment.
On January 9, 2006, Weininger also filed a cross-claim against Rabinowitz Boudin for turnover of the funds in the Rabinowitz Boudin Account at JPM Chase. (See Perkins Decl. ¶ 17.) Weininger served Rabinowitz Boudin by hand and mailed copies to the judgment debtors by DHL. (See id. ¶ 18.)*fn6
Weininger now moves for a turnover order directing the Garnishees to relinquish funds from the Accounts. In response, JPM Chase cross-moved for interpleader relief. JPM Chase served its cross-motion for interpleader relief by DHL Air Mail upon ETECSA, EMTELCUBA, CUBAEXPORT, the Army of the Republic of Cuba, the Republic of Cuba, Raul Castro, Fidel Castro, RADIOCUBA, Banco Nacional. It served the same upon Rabinowitz Boudin by Express Mail. (See Kerr Suppl. Decl. ¶¶ 39-40; Exs. C(1), C(2).)
McCarthy's judgment is based on a claim against the
Republic of Cuba arising from the execution of her husband, Howard F. Anderson ("Anderson"), by a Cuban firing squad shortly after his conviction by a "Revolutionary Tribunal" for allegedly acting as a liaison for an anti-communist group and conspiring to smuggle weapons to anti-Castro forces in Cuba.
See McCarthy v. Republic of Cuba, No. 01-26628 CA 04 (Fla. Cir. Ct., 11th Cir., Miami-Dade Cty., April 17, 2003) ("McCarthy Judgment") (attached as Ex. A to DeMaria Decl.). The Florida Circuit Court issued a final order authorizing entry of default judgment against the Republic of Cuba on April 17, 2003, and awarded compensatory damages to Anderson's estate and family in the aggregate amount of $67 million. See id. at 12-17.
McCarthy subsequently brought an action on the judgment in the United States District Court for the Southern District of Florida. On February 2, 2005, that court entered a final default judgment against the Republic of Cuba. (See DeMaria Decl., Ex. B., at 4-5.) On May 22, 2005, McCarthy registered that federal judgment with this Court pursuant to 28 U.S.C. § 1963. (See DeMaria Decl. ¶ 5; Ex. F.) On August 22, 2005, the judge sitting in Part I in this Court granted an order authorizing issuance of a writ of execution for McCarthy to levy upon the Republic of Cuba's property in this district for the purposes of satisfying the registered judgment.
On September 2, 2005, the United States Marshal served Rabinowitz Boudin and JPM Chase with a writ of execution levying upon the EMTELCUBA, AT&T Long Lines, and Rabinowitz Boudin Accounts.*fn7
Separately, McCarthy sought to enforce the federal registered judgment in the New York Supreme Court. On August 24, 2005, that court held that the FSIA did not preclude enforcement of the Florida state and federal court judgments and granted McCarthy's motion to execute upon the judgment against the Republic of Cuba. See McCarthy v. Republic of Cuba, 800 N.Y.S. 2d 906, 909 (Sup. Ct. N.Y. Co. 2005).
As indicated above, JPM Chase's third-party petition was filed against McCarthy, among others. In response to JPM Chase's third-party petition, on November 14, 2005 McCarthy filed a counter-petition for turnover, asserted against both JPM Chase and Rabinowitz Boudin in their capacity as garnishees, seeking turnover of funds in those accounts. McCarthy served Rabinowitz Boudin by hand. (See Docket No. 104, Ex. 3 (Affidavit of Service).) In addition, McCarthy served her turnover petition in accordance in accordance with the FSIA upon the Republic of Cuba, as well as the various Cuban entities identified by Chase in its papers (including Banco Nacional, EMTELCUBA, RADIOCUBA, ETECSA, and CUBAEXPORT), by serving copies in both English and Spanish by DHL through the Clerk of Court. (See R.56.1 Statement ¶ 40; DeMaria Aff. ¶ 9; Docket No. 104.). As indicated, these actions were consolidated before this Court. McCarthy now moves for turnover of assets in those accounts.
C. JPM CHASE'S CROSS-MOTION FOR RELIEF IN THE NATURE OF INTERPLEADER
JPM Chase asserts that as a result of the Plaintiffs' actions to execute against the Accounts, it is exposed to "inconsistent legal obligations and to the risk of double or multiple liability." (Mem. of Law in Response to Motion for Partial Summary Judgment on Claims for Turnover and in Support of Cross-Motion for Relief in the Nature of Interpleader, dated Mar. 10, 2006 ("JPM Chase Mem."), at 2.) JPM Chase commenced third-party proceedings in order to bring all adverse claimants to the blocked deposits before the Court and to obtain a discharge in interpleader and as a garnishee under CPLR §§ 5209 and 5239.
JPM Chase seeks an order from the Court that will (a) determine whether JPM Chase is to be required to comply with the turnover order sought by Plaintiffs; (b) incorporate findings intended to protect any turnover order from collateral attack, and (c) discharge JPM Chase from any further liability to any present or future adverse claimants-respondents, with respect to the accounts subject to turnover. JPM Chase also seeks reimbursement for its expenses in seeking interpleader relief.
To prevail on a motion for summary judgment, the moving party must demonstrate that "there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." Fed. R. Civ. P. 56(c). The Court ascertains which facts are material by considering the substantive law of the action, for only those "facts that might affect the outcome of the suit under the governing law will properly preclude the entry of summary judgment." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). Even if a dispute over material facts exists, summary judgment may be granted unless the dispute is "genuine," i.e., "there is sufficient evidence favoring the nonmoving party for a jury to return a verdict for that party." Id. at 249. In determining whether genuine issues of material fact exist, "[t]he evidence of the non-movant is to be believed, and all justifiable inferences are to be drawn in his favor." Id. at 255 (citing Adickes v. S.H. Kress & Co., 398 U.S. 144, 158-59 (1970)).
The property in the United States of a foreign state and its agencies and instrumentalities is generally immune from execution under the FSIA unless a specific exception applies pursuant to the FSIA. See 28 U.S.C. § 1609; FG Hemisphere Assocs., LLC v. Republique du Congo, 455 F.3d 575, 584 (5th Cir. 2006); DeLetelier v. Republic of Chile, 748 F.2d 790, 793 (2d Cir. 1984). Conversely, federal courts lack subject matter jurisdiction over enforcement proceedings against the property of a foreign state unless a statutory exception to immunity applies. See Verlinden B.V. v. Central Bank of Nigeria, 461 U.S. 480, 489 (1983); FG Hemisphere, 455 F.3d at 584; DeLetelier, 748 F.2d at 793.*fn8 Plaintiffs seek to execute judgments against property in the United States of the Republic of Cuba ("Cuba") and certain alleged agencies and instrumentalities of Cuba. Accordingly, the Court must determine whether any statutory exception to immunity from execution applies to permit execution in this proceeding.
As set forth below, the Court concludes that Section 201(a) of the Terrorism Risk Insurance Act of 2002, Pub. L. No. 107-297, 116 Stat. 2322, ("TRIA") provides an exception to immunity from execution over the funds in question.
Before reaching the question of TRIA's applicability to the Weininger and McCarthy judgments, the Court will first examine the question raised by JPM Chase and CEC regarding whether the Weininger and McCarthy judgments are entitled to enforcement by this Court. CEC argues that the judgments are unenforceable because the Florida state courts that rendered the judgments purportedly lacked subject matter and personal jurisdiction under the FSIA, while JPM Chase suggests that the judgments may be unenforceable on such ground. As discussed below, the Court is not persuaded that the judgments are unenforceable on account of the alleged jurisdictional deficiencies of the Florida state courts.
The Court first makes several preliminary observations. It is beyond question that this Court must satisfy itself that it has jurisdiction to rule on any question it needs to decide that resolves the merits of a dispute. This unremarkable and fundamental principle is reflected in countless precedents as well as in the special status accorded subject matter jurisdiction in the Federal Rules of Civil Procedure, which allow the subject matter jurisdiction of a court to be raised at any time, even by the court on its own initiative. See Fed. R. Civ. P. 12(h)(3). What makes this case unique is the question of the extent to which such inquiry into the Court's own subject matter jurisdiction should encompass probing further back in the jurisdictional chain to examine the authority of a prior court, the judgment of which this Court is called upon to authorize execution, especially where, preceding the matter before this Court, other courts took intermediate actions that recognized or assumed the validity of the underlying judgments without review of the subject matter jurisdiction of the court which rendered the judgments.
To be sure, attacks on a prior court's jurisdiction, both subject matter and personal, are routinely made and obligate the later court to consider the challenge. Such an inquiry generally arises after a default judgment is rendered, when the party who won the judgment seeks to enforce it. The party who defaulted in the first proceeding will then collaterally attack the judgment, arguing that the rendering court lacked jurisdiction, and thus that he or she should not be bound. Here, however, the question is posed without any collateral attack by the parties against whom the judgment is sought to be enforced. Instead, the jurisdictional question is raised by a third party serving as amicus curiae, as well as by a garnishee seeking not to void the judgment but merely to obtain interpleader relief.
In the absence of any collateral attack, what governs this Court's obligation defining how far back in the decisional line it need go in ascertaining the propriety of the jurisdictional issues now before it and its own authority to rule? Stated differently, what duty does this Court have on its own motion to re-examine the jurisdictional competence, and resultant factual and legal determinations, of courts preceding it in the decisional order that also were under similar obligation to confirm their authority as a predicate to rendering a judgment on the merits, and how deeply into the record of these extensive proceedings need this Court probe?
In this case, there have already been two levels of review. First, the Florida state courts determined their jurisdiction. Nor was such determination implicit or cursory, as might have been the case in the entry of a routine default judgment. Instead, because § 1608(e) of the FSIA bars entry of default against a foreign state unless the claimant establishes a claim or right to relief "by evidence satisfactory to the court," 28 U.S.C. § 1608(e), the Florida courts whose judgments are at issue here held hearings, took evidence, satisfied themselves of their jurisdiction and expressly so ruled.
Then, in the McCarthy case, a Florida federal district court held that the state court judgment was entitled to full faith and credit. Those same judgment debtors were served and failed to appear, and the federal court made an implicit determination of jurisdiction -- both its own and the state court's -- and found the judgment entitled to be enforced. In the Weininger case, this Court granted summary judgment in lieu of complaint recognizing the Florida judgment, finding it entitled to full faith and credit, and thus implicitly recognizing both its own and the Florida state court's jurisdiction after service upon the judgment debtors who again failed to appear.
Even now, in these enforcement proceedings, neither the judgment debtors nor the other entities which JPM Chase has impleaded and whose alleged assets are at risk of loss, have appeared, despite notice, to contest the validity of the judgments or that such judgments should be enforced against them. Under these circumstances, the policies and principles underlying res judicata doctrine would make it manifestly inequitable for this Court to reopen the judgments so as to permit a challenge to the underlying adjudication at the request of parties not affected by the judgments, and in particular at the behest of a party who appears as amicus here by the grace of the Court.
A. ENFORCEABILITY OF THE WEININGER AND MCCARTHY JUDGMENTS
JPM Chase and CEC assert that the Weininger and McCarthy judgments are unenforceable against the judgment debtors because the Florida state courts that rendered judgment erred in determining that FSIA § 1605(a)(7) ("§ 1605(a)(7)") provided jurisdiction over the judgment debtors. The FSIA provides the sole basis for obtaining jurisdiction over a foreign state or an agency or instrumentality of a foreign state. See Saudi Arabia v. Nelson, 507 U.S. 349, 355 (1993); Argentine Republic v. Amerada Hess Shipping Corp., 488 U.S. 428, 434 (1989); Verlinden, 461 U.S. at 488-89. Unless one of the exceptions to immunity from jurisdiction set forth in the FSIA applies, a foreign state and its agencies and instrumentalities are immune from the subject matter jurisdiction of federal and state courts. See Saudi Arabia, 507 U.S. at 355; Verlinden, 461 U.S. at 488-89; Zappia Middle East Constr. Co. v. Emirate of Abu Dhabi, 215 F.3d 247, 250-51 (2d Cir. 2000). Pursuant to the FSIA, a court acquires personal jurisdiction over a foreign state or instrumentality of a foreign state where the court has subject matter jurisdiction pursuant to the FSIA and where service has been made on the foreign state or instrumentality as specified by FSIA § 1608. See 28 U.S.C. § 1330(b).
JPM Chase and CEC argue that the Florida state courts erroneously determined that the FSIA provided subject matter jurisdiction over the judgment debtors in the state court proceedings. As noted above, the Florida state courts held, after requisite fact-finding proceedings, that jurisdiction over the named defendants in the Weininger and McCarthy state court actions arose under § 1605(a)(7). That provision states that a foreign state is not immune from the jurisdiction of state and federal courts in the United States where "money damages are sought against a foreign state for personal injury or death that was caused by an act of torture [or] extra-judicial killing." 28 U.S.C. § 1605(a)(7). However, that section further provides that a court "shall decline to hear a claim under this paragraph ... if the foreign state was not designated as a state sponsor of terrorism under section 6(j) of the Export Administration Act of 1979 (50 U.S.C. App. 2405(j)) or section 620A of the Foreign Assistance Act of 1961 (22 U.S.C. 2371) at the time the act occurred, unless later so designated as a result of such act." 28 U.S.C. § 1605(a)(7)(A). JPM Chase and CEC question the state courts' finding of jurisdiction pursuant to that section, noting that Cuba was not designated as a state sponsor of terrorism under those statutes at the time of the incidents giving rise to the Weininger and McCarthy judgments, and contending that although Cuba was later so designated, such designation was not "as a result of" the incidents giving rise to the judgments. In response, Plaintiffs argue first that the full faith and credit doctrine bars the Court from re-examining the issue of ...