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Satco Inc. v. Gas Turbine Controls Corp.

United States District Court, S.D. New York

February 26, 2018




         This commercial dispute concerns a collision between New York contract law and U.S. sanctions prohibiting unlicensed exports to the Islamic Republic of Iran. Defendants moved to dismiss the First Amended Complaint as time-barred. For the reasons set forth below and at the oral argument of this motion, the Court grants defendants' motion and dismisses the complaint with prejudice.

         I. Background

         A. Factual Background

         Plaintiff Saeed "Allen" Talebi is an Iranian national and the sole shareholder of plaintiff Satco Incorporated, a Canadian corporation that is "no longer ... active" but that maintained offices in Germany and Dubai at the time of the events at issue in this case. (First Amended Complaint ("FAC"), Doc. 24 ¶¶ 1-2.) Defendant Peter Zinman is the CEO of defendant Gas Turbine Controls Corporation (GTCC), a New York corporation. (Id. ¶ 3.)

         According to the First Amended Complaint, sometime before the imposition of the relevant American sanctions on Iran, an Iranian entity purchased a GE Speedtronic Control System, which is a piece of computer equipment for use in a natural gas purification plant. (Id. at 2.) The system includes identifying part and serial numbers such that any order of replacement parts is traceable back to the specific system sold to Iran. (Id. ¶ 8.)

         In early 2010, Talebi attempted to purchase parts for the system from several potential suppliers. (Id. ¶ 7.) He first approached General Electric subsidiaries in France and elsewhere, but those companies refused to sell him the parts on the ground that by 2010, U.S. sanctions prohibited such sales without a license from the Office of Foreign Assets Control (OFAC), a branch of the Treasury Department. (Id. ¶ 8.) Talebi then became aware of defendants through their website and contacted Zinman by telephone and email in March 2010. (Id. ¶¶ 9-10, 34.) After Talebi gave Zinman the relevant part and serial numbers, Zinman confirmed that GTCC could provide the desired parts. (Id. ¶¶ 11-12.) On or about April 26, 2010, the parties agreed that GTCC would sell Satco three parts for the system - a termination core, CPU, and analog board - for $390, 000. (Id. ¶¶ 12-13.)

         Defendants did not initially inquire as to the parts' ultimate destination and plaintiffs did not disclose that the parts were going to be shipped to the end user in Iran. (Id. ¶¶ 14-15.) Talebi first asked defendants to ship the parts to Satco's Dubai office. (Id. ¶ 16.) When defendants stated they could not ship the parts to Dubai, Talebi instead asked them to ship the parts to Satco's office in Germany. (Id. ¶¶ 1, 17.) Zinman agreed and instructed Talebi to wire the $390, 000 to GTCC's bank account in New York. (Id. ¶ 18.) Talebi wired the full amount in three installments between May 5 and August 17, 2010. (Id. ¶¶ 19-22.)

         GTCC never sent the parts. After defendants confirmed that Iran was the intended destination, they refused plaintiffs' requests (over the next year and half) that they send the parts, refund the $390, 000 wired by Talebi, or (on July 5, 2011) that they deposit the funds in a trust account until the resolution of the dispute. (Id. ¶¶ 23, 28.) Plaintiffs allege that despite the imposition of sanctions on trade with Iran, defendants could have sought a license from OFAC permitting the sale, but that they did not attempt to do so. (Id. at 3.)

         B. 2012 Westchester Action and Talebi's Federal Conviction

         Plaintiffs initially sought relief in New York state court. In May 2012, Satco filed a complaint against GTCC in New York Supreme Court, Westchester County, for breach of contract, imposition of constructive trust, and fraud under New York law. See Satco, Inc. v. Gas Turbine Controls Corp., No. 58041/2012 (N.Y. Sup. Ct. Westchester Cnty. 2012). Satco filed a voluntary discontinuance of that action on January 9, 2013. Plaintiffs now allege that they discontinued the case because their attorneys lacked an OF AC license as required to continue the litigation. (FAC at 5.)

         Meanwhile, in the summer of 2012, Talebi traveled to the United States on a visitor's visa intending to discuss the disputed transaction with defendants. (Id. ¶ 29.) Upon arrival, however, he was "immediately" arrested and charged by the U.S. Attorney for the Southern District of New York with conspiracy to violate the International Emergency Economic Powers Act, 50 U.S.C. §§ 1701-1707, and related regulations, in violation of 18 U.S.C. § 371. Talebi now maintains that GTCC and Zinman helped "orchestrat[e]" his arrest, although he provides no specific allegations to support this conclusion. (FAC at 4; see also Id. ¶¶ 29, 66.) Defendants do not appear to have been prosecuted for their role in the transaction. (Id. at 4 & ¶31.)

         Talebi pleaded guilty and was sentenced to a year and a day's imprisonment. See United States v. Talebi, No. 12 Cr. 295 (S.D.N.Y. 2013). He was deported to Iran upon his release from imprisonment on June 14, 2013, and now resides in Tehran. (FAC ¶¶ 2, 30.)

         C. Proce ...

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