Levin v. 650 Fifth Avenue Company

Background

Jeremy and Lucille Levin held partially unsatisfied judgments totaling $28,807,719 against the Islamic Republic of Iran, the Iranian Ministry of Information and Security, and the Iranian Islamic Revolutionary Guard Corps. They brought this turnover action under New York judgment-enforcement law, Federal Rule of Civil Procedure 69, and Section 201 of the Terrorist Risk Insurance Act of 2002 (TRIA). They sought to enforce the judgments against assets associated with 650 Fifth Avenue Company and the other defendants.

At issue in the motion were Alavi Foundation and 650 Fifth Avenue Company. Alavi was a New York not-for-profit corporation, and 650 Fifth Avenue Company was a New York partnership whose partners were Alavi and Assa. Its most valuable asset was a commercial building at 650 Fifth Avenue in New York City.

The Levins alleged that Alavi was owned or controlled by Iran, provided services for Iran, and managed the building for Iran. They also incorporated allegations from the Government’s earlier forfeiture complaint concerning the defendants and their connections to Iran. The motion to dismiss was filed under Federal Rule of Civil Procedure 12(b)(1), which permits a challenge to the court’s subject-matter jurisdiction, and Rule 12(b)(6), which permits dismissal for failure to state a legally sufficient claim.

Legal Framework

The TRIA allows a holder of a qualifying judgment against a terrorist party to attach or execute against the blocked assets of that party, including the blocked assets of its agencies or instrumentalities. The court explained that an entity is an agency or instrumentality if it was a means through which a material function of the terrorist party was carried out, provided material services to or for the terrorist party, or was owned, controlled, or directed by the terrorist party.

The assets also must be “blocked assets.” The TRIA defines that term to include property seized or frozen by the United States under specified sanctions authorities. The court relied on prior appellate precedent holding that property belonging to Iran or its agencies or instrumentalities under the relevant executive orders qualifies as blocked property.

Court’s Analysis

The court rejected the defendants’ argument that a 2010 consent order appointing a monitor legally prevented the Levins from alleging that Iran controlled, owned, directed, or received services from the defendants after 2010. The court said that the monitoring arrangement did not erase the organizations’ history or establish as a matter of law that they were not agencies or instrumentalities of Iran when the complaint was filed in February 2017.

The court nevertheless held that the complaint did not adequately allege the defendants’ agency or instrumentality status at the relevant time. The allegations from the Government’s complaint were largely historical, covering periods from the 1970s through early 2009. The complaint’s more current allegations consisted mainly of general statements that the defendants were Iranian agencies or instrumentalities, that Alavi was a front for Iran, and that Alavi was owned or controlled by Iran. Those allegations were not enough to plausibly show that, as of the complaint’s filing, the defendants provided material services to Iran or were owned, controlled, or directed by Iran.

For substantially the same reasons, the court held that the Levins had not adequately alleged that the defendants met the executive order’s definition of the Government of Iran. As a result, the complaint also failed adequately to allege that the assets sought were blocked assets under the TRIA.

Disposition

Judge Loretta A. Preska granted the defendants’ motion to dismiss for lack of subject-matter jurisdiction and for failure to state a claim without prejudice. The court granted the Levins leave to replead under Rule 15(a)(2), directed the parties to confer and submit a joint letter about how to proceed, and directed the Clerk to close the pending motion.