Levin v. 650 Fifth Avenue Company

Background

Jeremy and Lucille Levin originally brought this judgment-enforcement action under New York Civil Practice Law and Rules §§ 5225 and 5227, Federal Rule of Civil Procedure 69, and Section 201 of the Terrorist Risk Insurance Act of 2002 (TRIA). They sought to enforce a judgment against the Islamic Republic of Iran, Iran’s Ministry of Information and Security, and Iran’s Islamic Revolutionary Guard Corps, collectively referred to in the opinion as Iran.

The plaintiffs alleged that assets connected to Alavi Foundation, 650 Fifth Avenue Company, Bank Melli Iran, Assa Corporation, and Assa Company Limited could be used to satisfy that judgment. In August 2022, the court dismissed the original complaint because it did not plausibly allege that the defendants were agencies or instrumentalities of Iran when the enforcement action was filed. The court allowed the plaintiffs to file an amended complaint, which they did on October 31, 2022. Alavi Foundation and 650 Fifth Avenue Company then moved to dismiss the amended complaint for lack of subject-matter jurisdiction and failure to state a claim.

Legal standards

For a facial motion under Federal Rule of Civil Procedure 12(b)(1), the court considers whether the complaint alleges facts establishing subject-matter jurisdiction. The plaintiff does not have to present evidence at that stage, but must allege facts that plausibly suggest jurisdiction. Under Rule 12(b)(6), a complaint must contain enough factual material to make the requested relief plausible, rather than relying on conclusions or merely reciting the elements of a claim.

The court explained that TRIA permits a judgment holder to attach or execute against the blocked assets of a terrorist party, including the blocked assets of that party’s agencies or instrumentalities. To show that an entity is an agency or instrumentality, a plaintiff must allege that the entity was a means by which the terrorist party performed a material function, provided material services to or supported that party, or was owned, controlled, or directed by that party. The court stated that this status is determined when the enforcement complaint is filed. The assets must also qualify as “blocked assets” under TRIA.

Discussion

Subject-matter jurisdiction and ancillary jurisdiction. The plaintiffs argued that jurisdiction existed because they were collecting a federal judgment, had registered that judgment in the court, and had obtained a court order under 28 U.S.C. § 1610(c). They also relied on the court’s ancillary jurisdiction—the authority sometimes used to handle matters related to a court’s own judgment.

The court rejected these arguments. It held that the Foreign Sovereign Immunities Act and TRIA impose additional requirements governing attachment and execution against a foreign sovereign or its agencies and instrumentalities. Registering the judgment, obtaining a § 1610(c) order, and invoking ancillary jurisdiction did not eliminate the need to satisfy those requirements.

TRIA pleading. The plaintiffs argued that they did not need to allege a continuing agency or instrumentality relationship between the defendants and Iran as of the date they filed this enforcement action. They contended that allegations concerning an earlier relationship, together with allegations that the assets remained blocked, were sufficient.

The court disagreed. It held that the relevant date was the filing of the plaintiffs’ February 2017 complaint in this judgment-enforcement case. The amended complaint’s allegations were largely historical allegations and conclusory statements, including assertions that the defendants were agencies or instrumentalities of Iran “at all relevant times.” The court found that these allegations did not plausibly show the defendants’ agency or instrumentality status as of the relevant filing date. The same deficiency also made the allegations concerning the separate TRIA requirement that the assets be blocked insufficient. The motion to dismiss was therefore granted with respect to the TRIA claims.

New York claims. The amended complaint also reasserted claims under New York Civil Practice Law and Rules §§ 5225 and 5227. The defendants pointed to statements by the plaintiffs’ counsel saying that the plaintiffs would pursue only their TRIA claim. The plaintiffs offered a different explanation for those statements, but the court found that the statements, together with the plaintiffs’ failure to answer the defendants’ arguments for dismissing the New York claims, showed an unambiguous intent to abandon those claims. The motion to dismiss was granted with respect to the New York claims.

Disposition

Judge Preska granted the defendants’ motion to dismiss with prejudice. The court stated that the plaintiffs knew about the deficiencies in their original complaint and had not corrected them in the amended complaint. The clerk was directed to close the open motion and close case number 17-CV-959.

Effect of the ruling

The ruling ended the plaintiffs’ judgment-enforcement action in this case. The opinion expressly addressed the TRIA claims and the New York Civil Practice Law and Rules claims; it does not provide a separate merits determination that the defendants actually were, or were not, agencies or instrumentalities of Iran.