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Peterson v. Islamic Republic of Iran

United States District Court, Second Circuit

October 8, 2013

DEBORAH D. PETERSON, Personal Representative of the Estate of James C. Knipple (Dec.), et al., Plaintiffs,
v.
ISLAMIC REPUBLIC OF IRAN, et al., Defendants.

OPINION & ORDER

KATHERINE B. FORREST, District Judge.

This Opinion & Order is another in a series of decisions rendered by this Court in a long-running action by plaintiffs, judgment creditors of the Islamic Republic of Iran, seeking to collect billions of dollars in unsatisfied money judgments.[1] The procedural history and facts relating to this matter are set forth in the Court's prior decisions; the Court recites only those facts necessary to resolution of the instant motions.

On February 28, 2013, this Court granted summary judgment to plaintiffs for turnover of $1.75 billion in blocked assets (the "Blocked Assets") held in a segregated account at Citibank N.A. ("Citibank"). (ECF No. 367.) The Court subsequently granted a motion pursuant to Rule 54(b) of the Federal Rules of Civil Procedure, severing those claims and allowing an immediate appeal. (ECF Nos. 462, 463.)

Remaining before the Court are claims against Bank Markazi (the Central Bank of Iran), Banca UBAE SapA, and Clearstream Banking, S.A.[2] The two remaining claims in the Second Amended Complaint ("SAC") against Bank Markazi (the "Remaining Claims") are that Bank Markazi, UBAE, and Clearstream engaged in fraudulent conveyances and transfers relating to $250 million (Second Count) and for rescission relating to the same $250 million (Third Count).

Before this Court are three motions: Bank Markazi has moved to dismiss all Remaining Claims based on lack of subject matter jurisdiction under the Foreign Sovereign Immunities Act (the "FSIA"), 28 U.S.C. §§ 1602-11 (1996) (ECF No. 419), and has opposed certain discovery on the basis that the Court lacks jurisdiction. In particular, plaintiffs have made a letter-motion to compel dated August 15, 2013 (ECF No. 481), and Bank Markazi has opposed that motion by letter dated August 21, 2013 (ECF No. 487). Bank Markazi has itself sought a protective order as to upcoming depositions by letter-motion dated October 1, 2013 (ECF No. 499), and plaintiffs have opposed that motion by letter dated October 4, 2013 (ECF No. 503).

In its Opinion and Order dated February 28, 2013, this Court determined that there was a sufficient legal and factual basis for subject matter jurisdiction over Bank Markazi with respect to the turnover claims. Those claims related to funds that were then held in an account at Citibank in the United States. In contrast, there is no dispute that plaintiffs' Remaining Claims against Bank Markazi derive from two bonds with face values totaling $250 million-and that proceeds relating to the sale of these bonds are believed to be located outside the United States. (See, e.g., SAC ¶¶ 213, 217, ECF No. 216; Pls.' Mem. of L. in Opp. to Mots. to Dismiss ("Pls.' Opp.") 3, ECF No. 469.) Bank Markazi asserts that this Court lacks subject matter jurisdiction with respect to the Remaining Claims as to it since they relate to funds outside of the United States.

For the reasons set forth below, the Court denies Bank Markazi's motion to dismiss, grants plaintiffs' motion to compel discovery, and denies Bank Markazi's motion for a protective order.

I. FACTS RELEVANT TO THE REMAINING CLAIMS

As stated above, each of the Remaining Claims is based on defendant Bank Markazi's[3] alleged acts with respect to two U.S.-dollar denominated bonds with a face value of $250 million. (See, e.g., SAC ¶ 167.) According to plaintiffs, after they obtained judgments and it became clear that various sanctions and statutory provisions might allow for collection efforts of Bank Markazi's assets located in the United States, Bank Markazi transferred two bonds as to which a restraining order had been lifted (the "Transferred Assets") to an account at Clearstream in the name of UBAE (the "UBAE/Markazi Account"). (SAC ¶¶ 146-67.) Plaintiffs allege that this transfer was made without consideration (id. ¶¶ 154-55), and was made in order to conceal the identity of Iran as the beneficial owner of the two bonds (id. ¶¶ 142-43, 148-51). UBAE then sold the Transferred Assets to third parties; the proceeds from these sales have been maintained at Clearstream as credits, with Bank Markazi denominated as beneficiary. (Id. ¶¶ 167-68, 173, 262.)

II. LEGAL STANDARD FOR MOTION TO DISMISS

Plaintiffs have asserted that this Court has subject matter jurisdiction over their actions, inter alia, by virtue of the FSIA. (See SAC ¶ 19.)

"A case is properly dismissed for lack of subject matter jurisdiction under Rule 12(b)(1) when the district court lacks the statutory or constitutional power to adjudicate it." Makarova v. United States , 201 F.3d 110, 113 (2d Cir. 2000). To survive a Rule 12(b)(1) challenge to the Court's subject matter jurisdiction, the plaintiff must "allege facts that affirmatively and plausibly" suggest that jurisdiction exists. Amidax Trading Grp. v. S.W.I.F.T. SCRL , 671 F.3d 140, 145 (2d Cir.2011); see also GMA Accessories, Inc. v. Dorfman-Pacific Co., No. 11 Civ. 3731, 2012 WL 899385, at *3 (S.D.N.Y. Mar. 16, 2012) (holding that dismissal is proper "when the complaint fails to allege sufficient allegations to support subject matter jurisdiction").

As with motions brought pursuant to Rule 12(b)(6), in the context of a motion to dismiss for lack of subject matter jurisdiction, the Court draws "all facts-which we assume to be true unless contradicted by more specific allegations or documentary evidence-from the complaint." Amidax , 671 F.3d at 145. The Court also construes ...


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