The opinion of the court was delivered by: Katherine B. Forrest, District Judge
Pending before this Court are a series of actions to enforce money judgments against the Islamic Republic of Iran ("Iran") relating to acts of terrorism for which it has been found liable in various courts in the United States.*fn1
Among the assets as to which plaintiffs seek turnover is real property located at 650 Fifth Avenue, New York City, New York (alternatively, plaintiffs seek payment of a sum of money of equivalent value).*fn2 This building is currently held in the name of two of the defendants herein--the Alavi Foundation ("the Foundation") and the 650 Fifth Avenue Company ("650 Fifth Avenue" and collectively with the Foundation, the "Moving Defendants").*fn3
Defendants have moved to dismiss these actions pursuant to Fed. R. Civ. P. 12(b)(1) and 12(b)(6), for lack of subject matter jurisdiction and failure to state a claim. Moving Defendants' core argument as to both bases is the same: any action to enforce a judgment against the government of Iran must be brought against Iran--and neither the Foundation nor 650 Fifth Avenue is "Iran" in any sense, including as an agency or instrumentality. As a result, according to Moving Defendants, plaintiffs have failed to state a cause of action for turnover of assets. Moreover, Moving Defendants argue, even if there was some arguable connection to Iran, the only basis for subject matter jurisdiction against Iran here is the Foreign Sovereign Immunities Act ("FSIA"), and, for the same reason that the claim fails as a matter of law (i.e., neither the Foundation nor 650 Fifth Avenue is "Iran"), plaintiffs have failed to allege sufficient facts to support subject matter jurisdiction.
Moving Defendants have previously defeated similar attempts by judgment creditors seeking to collect judgments for other acts of terrorism and obtained dismissal of several actions. See, e.g., Gabay v. Mostazafan Foundation of Iran, 152 F.3d 918, 1998 WL 385909 (2d Cir. 1998); Flatow v. Islamic Republic of Iran, 67 F. Supp. 2d 535 (D. Md. 1999); Gabay v. Mostazafan Foundation of Iran, 968 F.Supp. 895 (S.D.N.Y. 1997).
They cannot do so here. There is a critical and dispositive difference between prior determinations with respect to other "turnover actions" and the one now before this Court: in 2008 and 2009, documents were obtained via search warrants executed against both Moving Defendants as well as the other, non-moving defendants. The historical record assembled from seized documents is extensively quoted in the verified complaint of the United States and incorporated by reference into the three complaints that are the subject of this motion. Those documents--the authenticity of which Moving Defendants do not dispute--demonstrate a robust factual basis to find that plaintiffs have sufficiently set forth a basis for subject matter jurisdiction because Moving Defendants "are" in fact, "Iran," or are legally "alter egos" or "organs" of Iran; accordingly, plaintiffs have also stated a claim.
For the reasons set forth below, Moving Defendants' motion to dismiss is DENIED.
The disposition of this motion turns upon this Court's determination, consistent with the standards for a motion pursuant to 12(b)(1), as to whether the Moving Defendants are in fact either synonymous with the Iranian government, are alter egos of the Iranian government (which would then place them in the equivalent legal position of the Iranian government), or are organs of the Iranian government whose activities provide a basis to ignore their separate corporate forms.
On March 29, 2011 (and prior to transfer of this matter to this Court), Judge Holwell issued a decision denying a motion to dismiss the in rem forfeiture action brought by the United States against these and the non-movant defendants (that action has also been transferred to this Court).*fn4 That opinion sets forth a detailed chronology of the lineage of the defendant entities and their interconnections. See In re 650 Fifth Avenue and Related Properties, 777 F. Supp. 2d 529 (S.D.N.Y. 2011). This Court assumes familiarity with that opinion and recites only facts relevant to its decision on this motion.
On October 23, 1983, Hezbollah and the Iranian Revolutionary Guard bombed a U.S. Marine Corps Barracks in Beirut, Lebanon, killing 241 United States Servicemen. A group of nearly 1000 plaintiffs, representing those injured, the estates of those killed, and family members, commenced a wrongful death class action lawsuit in the United States District Court for the District of Columbia. On September 7, 2007, that court ruled that Iran and the Iranian Ministry of Information and Security ("MOIS") had acted as state sponsors of terrorism and were liable for the deaths of the servicemen, awarding damages totaling $2,656,944,877. Peterson v. Islamic Republic of Iran, 515 F. Supp. 2d 25 (D.D.C. 2007).
On November 5, 1990, El Sayyid Nosair, a member of Al-Gam'aa Islamiyah--a terrorist organization led by Sheik Omar Ahmad Ali Abdel Rahman--shot and killed Rabbi Meir Kahane and wounded Irving Franklin and U.S. Postal Officer Carlos Acosta (collectively, the "Acosta plaintiffs"). The Acosta plaintiffs commenced a wrongful death suit in the United States District Court for the District of Columbia against Iran and MOIS. They were awarded $350,172,000. See Acosta v. The Islamic Republic of Iran, 574 F. Supp. 2d 15 (D.D.C. 2008).
On August 9, 2001, a suicide bomber in Israel killed Judith Greenbaum, a pregnant American woman. Her husband, father, mother, and her estate (collectively, the "Greenbaum plaintiffs") commenced a wrongful death suit in the United States District Court for the District of Columbia against Iran and MOIS. See Greenbaum v. Islamic Republic of Iran, 451 F.Supp.2d 90 (D.D.C. 2006). In 2006, that court found that Iran and MOIS had "provided material support and assistance to Hamas, the terrorist organization that orchestrated the bombing" and were therefore jointly and severally liable for damages in the amount of $19,879,023. See id. at 94.
B. The Foundation and 650 Fifth Avenue
The Alavi Foundation was originally established by the government of Iran and all facts appear to indicate that it has been continuously operated as part of the Iranian governmental apparatus. (Am. Compl. of the United States (Dkt. No. 51) ("U.S. Compl.") ¶ 21.)
The Foundation has gone through several name changes: it started as the Pahlavi Foundation in 1973; in 1980, following the Iranian Revolution, its name was changed to the Mostazafan Foundation of New York; in 1992 its name was again changed, this time to the Alavi Foundation.*fn5 (U.S. Compl. ¶¶ 24, 27.)
In 1973, Shah Reza Mohammad Pahlavi, who was then the Shah of Iran, established the "Pahlavi Foundation," a New York not-for-profit corporation. (U.S. Compl. ¶ 24.) Once the Foundation was established, the government of Iran, through its central bank, loaned to Bank Melli, which in turn loaned the Foundation, the funds to purchase the building located at 650 Fifth Avenue, New York, New York. (Id.)*fn6
The Iranian revolution began in 1978; by 1979 the Shah had fled the country and the then-exiled religious leader, Ayatollah Ruhollah Khomeini ("Khomeini" or the "Ayatollah"), returned to Iran and assumed control. Khomeini proclaimed establishment of the Islamic Republic of Iran in April 1979. (U.S. Compl. ¶ 25.)
In March 1979, the Ayatollah ordered the creation of the Bonyad Mostazafan va Janbazan ("Bonyad Mostazafan") as an umbrella organization to take possession of, manage and control property expropriated by the new Iranian revolutionary government. (U.S. Compl. ¶ 26.) The Revolutionary Council of the Islamic Republic of Iran approved the creation of the Bonyad Mostazafan. The Bonyad Mostazafan took control of the assets of the Pahlavi Foundation, including one of its major assets--the building located at 650 Fifth Avenue. (Id.)
In 1978-79, the new revolutionary government in Iran forced all five of the directors of the Pahlavi Foundation to resign. The Iranian Bonyad Mostazafan appointed new directors in 1980. (U.S. Compl. ¶ 27.) That same year, the Pahlavi Foundation filed an amended certificate of incorporation which, inter alia, renamed the Foundation the "Mostazafan Foundation of New York." (Id.) More than a decade later, in 1992, the Mostazafan Foundation of New York renamed itself the Alavi Foundation. (Id.)
C. Factual Record Derived from Seized Documents
Nearly thirty years after the Iranian Revolution and the establishment of the Foundation, in 2008 and 2009, search warrants were executed at the Alavi Foundation, a residence of a member of the board of the Foundation, a residence owned by Bank Melli, and the offices of 650 Fifth Avenue. (U.S. Compl. ¶¶ 69, 75, 82.) Documents obtained pursuant to these warrants reveal the following facts regarding extensive and continuous connections between the Foundation, 650 Fifth Avenue, Bank Melli, the Assa Corp., Assa Co. Ltd., and the Iranian government:
* In November 1980, the Bonyad Mostazafan held a conference in Tehran for the directors and managers of all of the offices of the various Iranian Mostazafan foundations worldwide. The then-president of the Mostazafan Foundation of New York, Manoucher Shafie ("Shafie"), communicated with the supervisor of the Iranian Bonyad Mostazafan, Mahmood Karimi Nouri ("Nouri") regarding arrangements for the conference. Nouri wrote to Shafie that reservations to attend the meeting could be made via the Iranian Ministry of Foreign Affairs and that he should bring with him all of the "beneficial suggestions you have to discuss the improvement of your unit." (U.S. Compl. ¶ 28.)
* In 1981, Shafie notified two employees of the Mostazafan Foundation of New York that they were terminated; the letterhead he used bore the symbol for the Islamic Republic of Iran. (Id. ¶ 29.)
* By the 1980s, the Mostazafan Foundation of New York had incurred a tax liability relating to rental income from the 650 Fifth Avenue property. To avoid the tax, Iranian government officials and directors of the Mostazafan Foundation of New York discussed various options. The plan that was ultimately adopted led to the creation of the 650 Fifth Avenue Company. (Id. ¶ 31.)
* As part of the discussions that led to the decision to create the 650 Fifth Avenue Company, the Deputy Prime Minister of Iran at that time, Tahmasb Mazaheri, wrote to the then Prime Minister of Iran, Mir-Hossein Mousavi regarding the tax issue and the possibility of creating the new legal entity. (Id. ¶ 32.)
* Mousavi noted his approval for this option stating, "The above circumstances were discussed in the office of the brother Ghasemi, the president of the Central Bank, in the presence of brother Najafi Elmi and both promised to cooperate. Your recommendation of this action, which will surely be beneficial to the Islamic Republic, will expedite processing this by the end of 1987 and allow new arrangements to be made for 1988." (Id. ¶ 32.) At that time, Ghasemi was the director of the Central Bank of Iran and Najafi Elmi was the general director of Bank Melli. (Id.)
* In November 1987, Mazaheri wrote to Mousavi seeking the Iranian Prime Minister's approval for the creation of the new entity to avoid paying taxes. (Id. ¶ 33.)
* In December 1987, the Iranian Prime Minister's office responded by giving authorization to proceed with the proposal to create the new legal entity. The letter was written on letterhead bearing a symbol for the Islamic Republic of Iran and the words "Islamic Republic, Office of the Prime Minister." (Id. ¶34.)
* Meeting minutes dated May 24, 1989, on letterhead for the Bonyad Mostazafan, describe a joint meeting held in Tehran that was attended by the Iranian Assistant Director of Commerce and International Affairs for the Bonyad Mostazafan and a member of the board of Bank Melli. The minutes state that "Bank Melli Iran company will partner with the New York Foundation"; the building at 650 Fifth Avenue was to be contributed to the new company. The minutes state "a representative from Bank Melli Iran should supervise the plan." (Id. ¶ 38.)
* In 1989, the Assistant Director of Commerce and International Affairs for the Bonyad Mostazafan requested approval of the partnership agreement between the Mostazafan Foundation of New York and Bank Melli Iran and states, "Please note the partnership is based on prior agreements between the Ministry of Finance, Bank Melli Iran, and the Bonyad Mostazafan . . . [I]t was decided to set the value of the building at $128 million and the share of Assa Company (Assa Co., which belongs to Bank Melli, is the partner of the Mostazafan Foundation) at $44,800,000, thus Bank Melli will earn $200,000 in cash." This letter was copied to the president of the Foundation. (Id. ¶39.)
* In a telex from early 1990 that was found in a search of the residence owned by Bank Melli, two individuals employed by Bank Melli discuss the history of the formation of 650 Fifth Avenue. That telex confirms that the Bonyad Mostazafan was involved in the formation of the new company. (Id. ¶ 40.)
* According to the partnership agreement entered into between the Foundation and Bank Melli, it was agreed that the partnership would be called the 650 Fifth Avenue Company, that the Foundation would contribute the building at 650 Fifth Avenue, New York, New York, and that Assa Corp. would contribute capital. (Id.
* Formalizing the creation of 650 Fifth Avenue required various filings with the State of New York's Attorney General's Office. In a letter dated September 21, 1989, the Attorney General's Office requested a list of officers and directors of the Assa Corp. and a statement as to whether there was any personal or business relationship between those persons and the Foundation. (Id. ¶ 43.) The Foundation's letter in response listed the officers and directors and did not state that two of them were affiliated with Bank Melli or detail the extensive prior contacts with the Foundation. Alavi's counsel responded "to the best of counsel's knowledge, 'there were no pre-existing agreements or understandings between any director, officer or principal of Assa Corp. and the Foundation.'" (Id. ¶ 44.)
* On September 29, 1989, the Attorney General's office specifically asked whether the transaction was "arms length." On October 4, 1989, Alavi's counsel stated that the formation of "the Partnership was an arms-length transaction between the Foundation and Assa Corp." (Id. ¶ 45.)
* A verified petition filed in New York State Supreme Court requesting leave to transfer the 650 Fifth Avenue building from the not-for-profit charitable foundation to the new 650 Fifth Avenue Company stated that the transaction was arms-length. Notably, that petition did not disclose the involvement of Bank Melli. (Id. ¶ 46.)
* In 1991, the Iranian Ambassador to the United Nations demanded the resignation of the Mostazafan Foundation's president. Subsequently, three of the Mostazafan Foundation's board members, including its president, wrote directly to the Ayatollah that they would resign from the Foundation pursuant to his instructions that had been conveyed to them. (Id. ¶¶ 49, 50.) Their letter stated, "In obedience to the Supreme Leader's Directives, we herewith announce our readiness to resign our posts of responsibility at the Mostazafan Foundation of New York . . . " (Id. ¶ 50.) The letter also set forth the activities undertaken by the Foundation and stated, "Our hope is that these activities will further improve and develop under the supervision of your Excellency and respected representative in the Mostazafan and Janbazan Foundation." (Id. ¶ 51.)
* In 1991, the Foundation held a meeting in Switzerland with the General and Regional International Chairmanship of the Bonyad Mostazafan regarding changes to the board of the New York Mostazafan. The minutes of that meeting reflect that the changes were "directed by our Supreme Leader." The minutes also describe (i) the status of the building at 650 Fifth Avenue; and in a section entitled "Building 650,"
(ii) the minutes describe the collection of rent from tenants, and (iii) payments made to Assa Corp. The minutes reflect that group also discussed charitable activities of the Foundation. (Id. ¶ 52.)
* Later in May 1991, the soon-to-be-former president of the Mostazafan Foundation, Badr, wrote to Sobhani, (Iran's International Director of the Bonyad Mostazafan), "Brother Kharrazi [the Iranian Ambassador to the United Nations] said to me that from now on, the role of the Managing Director and the role of the Board of Directors [of the Mostazafan ...