In re: 650 Fifth Avenue and Related Properties

Background

The Peterson Judgment Creditors held unsatisfied money judgments against Iran arising from Iran’s role in the October 23, 1983 terrorist bombing of a United States Marine barracks in Beirut. They sought to obtain property connected to Alavi Foundation and 650 Fifth Avenue Company to help satisfy those judgments under Section 201(a) of the Terrorism Risk Insurance Act of 2002. The litigation also included the Government’s civil forfeiture claims involving Alavi’s and 650 Fifth Avenue Company’s interests in the building at 650 Fifth Avenue.

After the Court of Appeals ordered release of Alavi’s share of rental income generated from January 5, 2018, through October 13, 2020, the Peterson Creditors sought a temporary restraining order and a preliminary injunction. They asked the court to prevent 650 Fifth Avenue Company from paying that income to Alavi until a final judgment. The court temporarily restrained release of the money on April 30, 2021, to permit briefing and held a show-cause hearing on May 7, 2021.

Court of Appeals’ mandate

The court first considered whether the Court of Appeals’ mandate already resolved the issue. The Peterson Creditors argued that the mandate did not prevent a preliminary injunction because they had not previously sought that relief in the Court of Appeals and because their arguments there concerned the Government’s forfeiture action, not their separate enforcement claims. Alavi argued that the mandate had implicitly rejected the concern that Alavi would dissipate the rental income.

The court concluded that the mandate did not resolve the preliminary-injunction issue. It reasoned that the Court of Appeals ordered release of the income as a remedy for a period when the Government had seized the property without first making the required probable-cause showing. Because the Peterson Creditors’ request for a preliminary injunction had not been presented for decision in that appeal, the district court could consider it.

Power to issue the injunction

The court applied the Supreme Court’s decision in Grupo Mexicano de Desarrollo, S.A. v. Alliance Bond Fund, Inc. In that decision, the Supreme Court held that a federal court generally cannot issue a preliminary injunction preventing a defendant from transferring assets when the plaintiff seeks money damages and claims no lien or equitable interest in those assets.

Judge Preska concluded that the Peterson Creditors’ request fell within that rule. The Peterson Creditors needed first to establish Alavi’s legal liability as an agency or instrumentality of Iran before executing against Alavi’s assets to satisfy the judgment against Iran. The court treated the requested relief as an effort to secure collection of a money judgment, rather than as an injunction supporting final equitable relief.

The Peterson Creditors argued that their claims under the Terrorism Risk Insurance Act were different from the claims in Grupo Mexicano and that writs of execution gave them a lien on the rental income. The court rejected both arguments. It found that the cited writs of execution were directed against Iran, not secured against Alavi’s rental income. The court therefore held that it lacked power to issue the requested preliminary injunction.

Delay and irreparable harm

The court also ruled that the injunction should be denied even if it had the power to issue one. A preliminary injunction requires a showing of likely irreparable harm—harm that cannot adequately be remedied later—and either a likelihood of success on the merits or sufficiently serious legal questions combined with a decisive balance of hardships.

The court found that the Peterson Creditors’ request was not timely. Alavi had regularly received rental-income distributions during much of the litigation, and this was the Peterson Creditors’ first attempt to block those distributions, nearly thirteen years after the consolidated cases began and more than eleven years after their initial complaint. The court found the Peterson Creditors’ explanations for the delay unpersuasive and concluded that they had not shown the required irreparable harm.

Disposition

The court denied the Peterson Creditors’ application for a preliminary injunction. It vacated the April 30, 2021 order temporarily restraining release of the rental income and directed the Clerk of Court to close the open motion. The parties, including the Government, were ordered to confer and submit a letter by May 28, 2021, proposing how to proceed after the Court of Appeals issued its mandate.