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Vera v. Vizcaya Argentaria

United States Court of Appeals, Second Circuit

December 30, 2019

Aldo Vera, Jr., as Personal Representative of the Estate of Aldo Vera, Sr., Plaintiff-Appellee,
Banco Bilbao Vizcaya Argentaria, S.A., Respondent-Appellant. William O. Fuller, as Successor Personal Representative of the Estate of Robert Otis Fuller; Gustavo E. Villoldo, individually and as Administrator, Executor, and Personal Representative of the Estate of Gustavo Villoldo; Alfredo Villoldo, Petitioners-Appellees,

          Argued: January 29, 2019

         Respondent-Appellant Banco Bilbao Vizcaya Argentaria, S.A. ("BBVA") appeals from an August 2, 2018 final judgment of the U.S. District Court for the Southern District of New York (Hellerstein, J.) entered following issuance of our mandate in Vera v. Banco Bilbao Vizcaya Argentaria, S.A., 729 Fed.Appx. 106 (2d Cir. 2018). As relevant here, the District Court's judgment rendered final several of its previous orders requiring BBVA to turn over funds to Petitioners-Appellees Jeannette Fuller Hausler, Gustavo E. Villoldo, and Alfredo Villoldo from a blocked electronic fund transfer originated by the Cuban Import-Export Corporation, an instrumentality of the Republic of Cuba. These turnover orders, in turn, rested on the District Court's grant of full faith and credit to default judgments that Petitioners-Appellees secured against Cuba in Florida state courts, whose jurisdiction against the sovereign was asserted under the state-sponsored terrorism exception of the Foreign Sovereign Immunities Act, 28 U.S.C. § 1605A ("FSIA"). The District Court made no independent findings regarding its own jurisdiction to enforce these judgments under the FSIA, and in particular under section 201(a) of the Terrorism Risk Insurance Act, 28 U.S.C. § 1610 note. Because our review of the record convinces us that jurisdiction did not lie, we reverse the judgment of the District Court, vacate the District Court's turnover orders, and remand the cause with instructions to dismiss the action for lack of subject-matter jurisdiction. Applying common-law equitable principles of restitution, we further direct the District Court to order Petitioners-Appellees, as well as Plaintiff-Appellee Aldo Vera, Jr., also a party in these proceedings and a beneficiary of the same turnover orders, to return to BBVA the funds that BBVA paid them under the void turnover orders.

         Reversed and Remanded with instructions.

          Roarke O. Maxwell, (Andrew C. Hall, on the brief), Hall, Lamb, Hall & Leto, P.A., Coral Gables, FL, for Petitioners-Appellees Gustavo E. Villoldo and Alfredo Villoldo.

          James W. Perkins, (Ashley A. LeBlanc, on the brief), Greenberg Traurig, LLP, New York, NY; Roberto Martinez, Colson Hicks Edison, P.A., Coral Gables, FL, for Petitioner-Appellee Jeannette Fuller Hausler.

          Robert A. Swift, Kohn, Swift & Graf, P.C., Philadelphia, PA; Jeffrey E. Glen, Anderson Kill P.C., New York, NY, for Plaintiff-Appellee Aldo Vera, Jr.

          Kenneth A. Caruso, (Christopher D. Volpe, Michelle Letourneau-Belock, on the brief), White & Case LLP, New York, NY, for Respondent-Appellant Banco Bilbao Vizcaya Argentaria, S.A.

          Before: Cabranes, Lynch, and Carney, Circuit Judges.


         This is the fifth appeal that we have seen in these proceedings. The current controversy arises from the efforts of Petitioners-Appellees Gustavo E. Villoldo and Alfredo Villoldo ("the Villoldos") and Jeannette Fuller Hausler (collectively, "the Villoldos and Hausler" or "Petitioners") to enforce several default judgments obtained by them against the Cuban government in Florida state courts. These judgments rest, factually, on allegations of torture and extrajudicial killing suffered by members of Petitioners' families in 1959 and 1960 at the hands of the revolutionary Cuban state. They rest, legally, with respect to those courts' jurisdiction over Cuba, on the state- sponsored terrorism exception of the Foreign Sovereign Immunities Act ("FSIA"), now codified at 28 U.S.C. § 1605A, and earlier found in substantially the same form at 28 U.S.C. § 1605(a)(7). Section 201(a) of the Terrorism Risk Insurance Act ("TRIA"), codified at 28 U.S.C. § 1610 note, would provide the District Court here a jurisdictional basis for enforcing those state judgments, if valid, by attaching and executing on Cuban assets blocked by banking institutions under the Cuban Assets Control Regulations, 31 C.F.R. Part 515.

         Section 1605A revokes a state's sovereign immunity from legal proceedings and liability for certain terrorism-related claims for personal injury and death if, in addition to meeting ordinary tort liability standards, "the foreign state was designated as a state sponsor of terrorism at the time [the tortious act] occurred, or was so designated as a result of such act." 28 U.S.C. § 1605A(a)(2)(A)(i)(I) (emphasis supplied). The Republic of Cuba ("Cuba") was designated as a state sponsor of terrorism only in March 1982-over two decades after the abhorrent conduct that Petitioners allege. Accordingly, courts may exercise jurisdiction over Petitioners' claims against Cuba only if they can establish that either (1) Cuba was designated as a state sponsor of terrorism in 1982 at least in part because of the actions it took against their family members in 1959 and 1960, or (2) Cuba committed certain acts of terrorism (within the statute's meaning) against Petitioners or their family members after 1982.

         Beginning in about 2007, Plaintiff-Appellee Aldo Vera, Jr. ("Vera"), the Villoldos, and Hausler (collectively, "Appellees") independently pursued litigation on their tort claims in Florida state courts, each obtaining a significant default judgment against Cuba. (Hausler's judgment was for over $400 million, Vera's, for $95 million, and the Villoldos', for $2.79 billion.) In 2013, seeking enforcement of those judgments in New York, they jointly filed an Omnibus Turnover Petition in the U.S. District Court for the Southern District of New York against nineteen banks. Those banks, Appellees alleged, held blocked Cuban assets in New York. One of the banks, Respondent-Appellant Banco Bilbao Vizcaya Argentaria, S.A. ("BBVA"), sought dismissal of the turnover petition, contending first that the District Court lacked subject-matter jurisdiction over the enforcement proceeding, and, then, in the alternative, that the Florida state court judgments were void and not entitled to the federal court's full faith and credit.

         The District Court denied BBVA's motion to dismiss but did not make a threshold jurisdictional determination in doing so, relying instead on the jurisdictional findings and legal conclusions of the three Florida state courts to proceed under TRIA section 201(a). As we held in reviewing (and vacating) a prior contempt order against BBVA issued by the District Court with respect to Vera, reliance on a state court's legal conclusions does not adequately support a federal court's own exercise of subject- matter jurisdiction against a foreign sovereign or its assets when a proceeding is predicated on a default judgment. In Vera v. Republic of Cuba, 867 F.3d 310, 318 (2d Cir. 2017) ("Vera III"), we explained that the District Court was required to "analyze the record independently to determine if Cuba was immune" from its jurisdiction and that the Florida courts' jurisdictional findings do not "bind or aid" it in making this determination. See Verlinden B.V. v. Cent. Bank of Nigeria, 461 U.S. 480, 493-94 (1983) ("At the threshold of every action in a District Court against a foreign state . . . it must apply the detailed federal law standards set forth in the Act."). Accordingly, the District Court's judgment against BBVA and the turnover orders that preceded it are subject to serious challenge.

         After carefully examining the record on appeal, we conclude that, had it independently determined the issue, the District Court would necessarily have found that Hausler and the Villoldos failed to establish that the exception to sovereign immunity provided for in section 1605A applied. As we ruled with respect to Vera in Vera III, Petitioners here have failed to show under section 1605A either that (1) Cuba was designated as a state sponsor of terrorism "as a result" of the pre-1982 acts underlying their judgments or that (2) the acts underlying their judgments occurred after 1982. Without either showing, the state-sponsored terrorism exception did not permit the court to exercise jurisdiction over Cuba's assets under TRIA section 201(a).

         Accordingly, and as spelled out in greater detail below, we decide that the District Court did not have subject-matter jurisdiction over this enforcement proceeding. We therefore REVERSE the District Court's judgment; VACATE the District Court's turnover orders; and REMAND the cause to the District Court with instructions (1) to dismiss the amended Omnibus Turnover Petition and (2) to enter an order directing restitution by Appellees of the funds that BBVA paid them.


         I. The start of the Vera proceedings

         The proceedings that culminated in this appeal began in March 2012, when Vera, who held a similar default judgment against Cuba issued by a Florida state court, filed suit in the U.S. District Court for the Southern District of New York seeking to enforce that judgment. Vera v. Republic of Cuba, No. 12-CV-1596 (S.D.N.Y.). In August 2012, after Cuba's default in the federal proceeding, the District Court (Hellerstein, J.) determined that Vera's Florida state court judgment was due full faith and credit and, accordingly, entered a federal judgment in the amount of approximately $49 million in Vera's favor. Then, in late 2012 and early 2013, Vera filed numerous turnover motions, seeking to seize assets from banks in New York that he alleged to be holding Cuban assets.

         Vera was not long alone in seeking to enforce a default judgment against Cuba in New York federal courts. In 2013, both Hausler and the Villoldos-that is, Petitioners in this case-intervened in the Vera enforcement proceedings, asserting that their rights as judgment creditors were entitled to priority over Vera's. Before reviewing what happened next in those proceedings, it will be helpful to describe the key facts underlying the Villoldo and Hausler state court judgments and to provide a short outline of their respective procedural histories.[2]

         II. The Villoldo judgment

         Gustavo E. Villoldo ("Gustavo") and Alfredo Villoldo ("Alfredo") are the Cuban- born sons of the late Gustavo Villoldo Argilagos ("Villoldo Argilagos"). Their father, a dual citizen of the U.S. and Cuba, founded a successful automotive company and owned numerous other businesses and landholdings in Cuba before the Cuban Revolution. After the revolution brought the Castro government to power on January 1, 1959, the Villoldo family became a target of the new regime because of their financial wealth and ties to the United States. Both sons are U.S. citizens.

         Cuban soldiers arrested Gustavo and Alfredo on January 6, 1959. Gustavo was detained in unhealthy and inhumane conditions, beaten, and interrogated under torture in a Cuban facility where executions were being carried out. After their release five days later, the brothers and their father continued to be subject to severe harassment by the Cuban government. Cuban soldiers repeatedly took Villoldo Argilagos into custody and threatened to murder the entire family unless he turned over the family's businesses and properties to the new regime. On February 16, 1959, one day after meeting with prominent Cuban government member Ernesto "Che" Guevara, Villoldo Argilagos committed suicide. He did so, according to Gustavo's testimony, because he was ordered to do so to save the lives of his wife and sons. The two brothers then fled to the United States, leaving behind their family's vast properties, which were soon after confiscated.

         After leaving Cuba, Gustavo Villoldo joined the Central Intelligence Agency, and engaged in important intelligence activities on behalf of the United States. These included the 1967 operation that led to Che Guevara's execution in Bolivia. In deposition testimony, Gustavo Villoldo recounted that, shortly after the operation, two Cuban agents were sent to New York to kidnap or kill him. He testified further in general terms that, between 1997 and 2003, when he was living in the United States, the Cuban government made numerous threats against his life.

         In August 2011, in a Florida state court proceeding, the Villoldo brothers secured a default judgment against Cuba for these wrongs. The court entered judgment in their favor in the amount of $2.79 billion, denominating $1 billion of that sum as punitive damages.[3] The Florida state court characterized Cuba's actions against the Villoldo family as "torture" within the meaning of section 1605A of title 28 and ruled that, under that section, it had subject-matter jurisdiction to hear their claims. In December 2011, the Villoldos sued Cuba in the U.S. District Court for the Southern District of New York, seeking recognition and enforcement of their Florida judgment under the Full Faith and Credit Act, 28 U.S.C. § 1738. Villoldo v. Castro Ruz, No. 11-CV-9394 (S.D.N.Y.) (Swain, J.). In October 2012, according full faith and credit to the Florida judgment, Judge Swain entered a default judgment against Cuba and related individuals and entities in that case in the sum awarded by the Florida state court, making no independent jurisdictional findings.

         In November 2017, after their ongoing enforcement proceedings in the District Court were nearly complete, the Villoldos (having returned to Florida state court) filed a "motion to re-establish the court record" there with respect to the 2011 judgment. They submitted new affidavits from Gustavo Villoldo, his daughter Elia Lora, and his attorney Andrew C. Hall, and various attachments to those affidavits. Granting this motion, the Florida state court then ruled-in November 2017-that "the information contained within the affidavits and attachments were relied upon by the Court when rendering its verdict at trial [in 2011] in this case." J. App'x 1027. Citing this newly- submitted evidence, the Florida court issued an opinion and amended final judgment on June 4, 2018, making significant additional findings of fact and instructing that the judgment was effective nunc pro tunc as of August 19, 2011.

         In their 2017 affidavits, Gustavo Villoldo and Elia Lora represented that they had earlier testified at trial that their home in Florida was once surrounded by armed men whom they perceived to be agents of the Cuban state.[4] Lora's affidavit reflects that she had observed four men with large guns in their hands, that her family members armed themselves with two AR-15 rifles and yelled at the intruders to leave, and that local police responded to their 911 call within minutes but could not find the intruders. Neither Alfredo nor Gustavo Villoldo was present in the home at the time. More broadly, Gustavo Villoldo averred that he was subjected to a "concerted and continuing effort" by Cuba following Che Guevara's death in 1967 "to locate [him] in order to carry out [his] assassination." J. App'x 882.

         III. The Hausler judgment

         Jeannette Fuller Hausler (now deceased) was a U.S. citizen.[5] Her brother, Robert Otis Fuller, nicknamed "Bobby," was a dual U.S.-Cuban national born in Cuba, and heir to significant Cuban agricultural and business holdings. Mirroring the Villoldos' experience, the Fuller family's lives and properties were threatened by the new Cuban regime after January 1959. In early October 1960, Cuban agents arrested Fuller, who was returning from a short trip to Miami, and charged him with engaging in counterrevolutionary activities. He was tortured until he signed a prepared confession.

         Fuller was then presented to a military tribunal where, within minutes, he was tried and sentenced to death. In the proceedings, he was denied access to meaningful legal counsel and was not permitted to call witnesses in his defense. On October 16, 1960, he was executed by firing squad. His death prompted the U.S. Department of State to file a formal protest denouncing the proceedings. In the protest, the Department accused the Cuban authorities of carrying out Fuller's trial in a "Roman [c]ircus atmosphere," failing to "observe basic civilized standards," and engaging in "inhuman behavior." J. App'x 597-98.

         In January 2007, in Florida state court, Hausler secured a default judgment against Cuba for $400 million, of which $300 million was designated as punitive and $100 million as compensatory damages. In an opinion accompanying the judgment, the Florida state court ruled that Fuller was a victim of "extra-judicial killing" and asserted jurisdiction over Cuba under the FSIA's state-sponsored terrorism exception, then codified at 28 U.S.C. § 1605(a)(7).[6] J. App'x 592. The following year, on Hausler's application, the U.S. District Court for the Southern District of Florida granted full faith and credit to the state court judgment and entered a default judgment against Cuba, making no independent jurisdictional findings. Hausler v. Republic of Cuba, No. 08-CV- 20197 (S.D. Fla.) (Jordan, J.).

         Hausler then began proceedings in the Southern District of New York. Hausler v. Republic of Cuba, No. 09-CV-10289 (S.D.N.Y.) (Marrero, J.). In 2009 and 2010, relying on the Florida state and federal judgments, Hausler served writs of garnishment against various New York banks holding blocked Cuban assets. She then formally intervened in the Vera enforcement proceedings, now before us on appeal.

         IV. The Vera enforcement proceedings

         The proceedings leading to this appeal have been protracted and circuitous, to say the least. As previewed in Section I, supra, Hausler and the Villoldos sought to use their Florida state court judgments to seize Cuban assets held by banks operating in the Southern District of New York. In 2013, both intervened in the Vera proceedings. Between March and June of that year, the Villoldos opposed Vera's turnover motions, contending that Vera's Florida state court judgment was void for lack of subject-matter jurisdiction and asserting, inter alia, that Aldo Vera, Sr., the victim of Cuba's acts, was not a U.S. national and was not actually killed by agents of Cuba, but rather by criminal elements operating in Puerto Rico.[7] In May 2013, Hausler intervened, contending that her rights as a judgment creditor preceded and therefore should take priority over those of both Vera and the Villoldos.

         After this initial period of competition, however, the three family groups reached a détente. They advised the District Court that they would jointly petition for turnover of the relevant assets. In September 2013, they did so, filing the Omnibus Petition for Turnover Order ("Omnibus Petition") that we have mentioned and naming as respondents BBVA and eighteen other banks which, they alleged, were holding blocked Cuban assets.[8]

         BBVA moved to dismiss the Omnibus Petition for lack of subject-matter jurisdiction. The District Court denied the motion, construing BBVA's motion as a collateral attack on the Florida state court judgments, and not as a challenge to its own jurisdiction. In rejecting BBVA's arguments, the District Court commented that "[BBVA] must concede that the Florida [courts] made appropriate jurisdictional findings, and created a sufficient evidentiary record." Vera v. Republic of Cuba, 40 F.Supp.3d 367, 376 (S.D.N.Y. 2014). The court further interpreted BBVA's motion as an improper challenge to the "merits" of the Florida state courts' determinations in that it attacked the Florida courts' findings (in the District Court's words) "that Cuba was designated as a state sponsor of terrorism, at least partially, as a result of the acts against Villoldo, Hausler, and Vera." Id. This "merits" argument was impermissible, in the District Court's view, because the Florida courts "held a trial in each of the three cases, found the facts, and applied the law, finding that acts of terrorism took the lives of plaintiffs' family members [and] that Cuba was designated as a state sponsor of terrorism either before these acts or partially as a result of these acts." Id.[9]

         Determining then that it had jurisdiction to proceed, the District Court entered two orders important to the resolution of the appeal before us. In September 2014, the court enforced a subpoena in which Vera sought information about BBVA's holdings of Cuban assets outside the United States. Then, in March 2015, the District Court ordered that BBVA turn over the contents of a certain account to the U.S. Marshal. That account contained $553, 185.21, the proceeds of an electronic fund transfer ("EFT") that had been initiated by the Cuban Import-Export Corporation, a Cuban instrumentality.[10] Vera v. Republic of Cuba, 91 F.Supp.3d 561, 573 (S.D.N.Y. 2015).

         BBVA timely appealed both of these orders, but we were compelled to dismiss its appeals for lack of jurisdiction because neither the order enforcing Vera's subpoena nor the turnover orders were "final decisions" of the District Court appealable under 28 U.S.C. § 1291. See Vera v. Republic of Cuba, 802 F.3d 242, 246 (2d Cir. 2015) ("Vera I") (subpoena enforcement order not appealable); Vera v. Republic of Cuba, 651 Fed.Appx. 22, 26 (2d Cir. 2016) ("Vera II") (turnover orders not appealable).

         After our decision in Vera I, BBVA refused to produce any information in response to the subpoena, and, upon the parties' stipulation to that effect, the District Court held BBVA in contempt in April 2016. BBVA appealed the contempt order, this time secure in its expectation of appellate jurisdiction. See In re Air Crash at Belle Harbor, 490 F.3d 99, 104 (2d Cir. 2007) (contempt orders regarded as final and appealable). In May 2017, while its appeal from the contempt order was pending, the District Court denied BBVA's motion for a further stay and ordered that the funds seized from BBVA be turned over to Appellees collectively.[11] Vera v. Republic of Cuba, No. 12-CV-1596 (AKH), 2017 WL 4350568, at *3 (S.D.N.Y. May 25, 2017).

         In adjudicating BBVA's appeal from the District Court's contempt order, we held that the District Court lacked subject-matter jurisdiction over Vera's enforcement action against Cuba altogether; therefore, both the subpoena served by Vera on BBVA to enforce his judgment and the subsequent contempt order were void. Vera v. Republic of Cuba, 867 F.3d 310, 321 (2d Cir. 2017) ("Vera III"). Because Vera III concerned a discovery dispute pertaining only to Vera, however, the question whether the District Court had subject-matter jurisdiction to enforce the judgments held by Hausler and the Villoldos was not before us. In line with our mandate in Vera III, the District Court vacated the judgment it issued as to Vera, quashed Vera's subpoena, and vacated the related contempt order. It took no action with respect to Hausler and the Villoldos.

         BBVA then appealed the District Court's May 2017 order directing that the funds be disbursed jointly to the three cooperating sets of plaintiffs, and we once again dismissed its appeal of the non-final order for lack of appellate jurisdiction. Vera v. Banco Bilbao Vizcaya Argentaria, S.A., 729 Fed.Appx. 106 (2d Cir. 2018) ("Vera IV"). This time, however, we directed the District Court "to issue an appealable final judgment expeditiously" on remand so as to facilitate prompt review. Id. at 108.

         In accordance with our mandate in Vera IV, the District Court entered final judgment on August 2, 2018. BBVA timely appealed. Now, on this matter's fifth trip to this Court, [12] our appellate jurisdiction over the entirety of the dispute between BBVA, ...

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