Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-ca9-13-15442/USCOURTS-ca9-13-15442-0/pdf.json

Nature of Suit Code: 360
Nature of Suit: Other Personal Injury
Cause of Action: 

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FOR PUBLICATION

UNITED STATES COURT OF APPEALS

FOR THE NINTH CIRCUIT

MICHAEL BENNETT; LINDA

BENNETT, as Co-Administrators of

the Estate of Maria Ann Bennett,

Plaintiffs-Appellees,

v.

THE ISLAMIC REPUBLIC OF IRAN,

Defendant,

v.

VISA INC.; FRANKLIN RESOURCES,

INC.,

Defendants-third-partyplaintiffs–Appellees,

v.

GREENBERG AND ACOSTA

JUDGEMENT CREDITORS,

Plaintiff-third-partydefendant–Appellee,

HEISER JUDGMENT CREDITORS,

Plaintiff-fourth-partydefendant–Appellee,

v.

No. 13-15442

D.C. No.

3:11-cv-05807-

CRB

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2 BENNETT V. BANK MELLI

BANK MELLI,

Plaintiff-third-partydefendant–Appellant.

MICHAEL BENNETT; LINDA

BENNETT, as Co-Administrators of

the Estate of Maria Ann Bennett,

Plaintiffs-Appellees,

v.

THE ISLAMIC REPUBLIC OF IRAN,

Defendant,

v.

VISA INC.; FRANKLIN RESOURCES,

INC.,

Defendants-third-partyplaintiffs–Appellees,

v.

GREENBERG AND ACOSTA

JUDGEMENT CREDITORS,

Plaintiff-third-partydefendant–Appellee,

HEISER JUDGMENT CREDITORS,

Plaintiff-fourth-partydefendant–Appellee,

No. 13-16100

D.C. No.

3:11-cv-05807-

CRB

OPINION

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BENNETT V. BANK MELLI 3

v.

BANK MELLI,

Plaintiff-third-partydefendant–Appellant.

Appeals from the United States District Court

for the Northern District of California

Charles R. Breyer, Senior District Judge, Presiding

Argued and Submitted

April 15, 2015—San Francisco, California

Filed August 26, 2015

Before: Alex Kozinski and Susan P. Graber, Circuit Judges,

and Dee V. Benson,* Senior District Judge.

Opinion by Judge Kozinski

* The Honorable Dee V. Benson, Senior District Judge for the U.S.

District Court for the District of Utah, sitting by designation.

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4 BENNETT V. BANK MELLI

SUMMARY**

Terrorism Risk Insurance Act / Foreign Sovereign

Immunities Act

The panel affirmed the district court’s denial of the

motion of Bank Melli, the national bank of the Islamic

Republic of Iran, to dismiss claims filed against it in an action

seeking enforcement pursuant to the Terrorism Risk

Insurance Act and the Foreign Sovereign Immunities Act of

terrorism-based judgments entered against Iran.

Creditors sought access to blocked Iranian assets held by

other parties but owed to Bank Melli. The panel held that the

TRIA and 28 U.S.C. § 1610(g) abrogate the asset immunity

of all of a terrorist state’s instrumentalities, including those

that are not alter egos of the state. The panel held that Bank

Melli was not an indispensable party that could not be joined

under Federal Rule of Civil Procedure 19. The panel rejected

the argument that applying the TRIA and section 1610(g) to

the judgments at issue would be impermissibly retroactive

because the creditors obtained the judgments against Iran

before the statutes’ enactment. The panel also rejected the

argument that Bank Melli did not own the assets.

** This summary constitutes no part of the opinion of the court. It has

been prepared by court staff for the convenience of the reader.

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BENNETT V. BANK MELLI 5

COUNSEL

Jeffrey A. Lamken, Robert K. Kry (argued), Lucas M.

Walker, MoloLamken LLP, Washington D.C., for Appellant.

Curtis C. Mechling (argued) of Stroock & Stroock & Lavan

LLP, New York, New York, and Dale K. Cathell of DLA

Piper LLP, Baltimore, Maryland, and Jane Carol Norman of

Bond & Norman, Washington, D.C., for Judgment Creditor

Appellees.

Benjamin T. Peele, III (argued) of Baker & McKenzie LLP,

Washington, D.C., and Bruce H. Jackson of Baker &

McKenzieLLP, San Francisco, California for Appellees Visa,

Inc. and Franklin Resources, Inc.

OPINION

KOZINSKI, Circuit Judge:

Congress has enacted two statutes to help victims of

terrorism collect on money judgments against the foreign

states responsible for sponsoring the attacks. We consider

whether victims can collect from an instrumentality of a state

that has sponsored terrorism when the instrumentality is a

separate juridical entity that wasn’t a party to the underlying

lawsuit.

I. Background

The Foreign Sovereign Immunities Act (FSIA) is the sole

basis for jurisdiction over foreign states in U.S. courts. 

28 U.S.C. § 1330. Under the FSIA, foreign sovereigns are

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6 BENNETT V. BANK MELLI

generally immune from jurisdiction, except for a few

carefully delineated exceptions. One such exception is for

claims arising out of acts of state-sponsored terrorism. See

id. § 1605A.

Four groups of individuals—the Bennett, Greenbaum,

Acosta and Heiser creditors—hold separate judgments

obtained in U.S. courts against the Republic of Iran, based on

various terrorist attacks that occurred between 1990 and

2002. The Bennett creditors are owed almost $13 million in

damages for Iran’s role in the 2002 bombing of a cafeteria at

Hebrew University in Jerusalem. The Greenbaum creditors

are owed almost $20 million for a 2001 bombing of a

Jerusalem restaurant. The Acosta creditors are owed over

$350 million for Iran’s part in a 1990 mass shooting. And,

finally, the Heiser creditors are owed over $590 million for

the 1996 bombing of the Khobar Towers in Saudi Arabia. All

judgments were by default, but no one disputes that they are

valid and that all four sets of creditors are owed money by

Iran.

However, winning a money judgment against a foreign

state isn’t the end of the story, because sovereign immunity

separately protects the assets of a foreign sovereign from

attachment. For years, the state-sponsored terrorism

exception to the FSIA created an anomaly—it abrogated a

foreign sovereign’s immunity from judgment, but not its

immunity from collection. Terrorism victims therefore had

a right without a meaningful remedy.

Congress subsequently enacted two statutes closing this

loophole: section 201(a) of the Terrorism Risk Insurance Act

(TRIA) and 28 U.S.C. § 1610(g). Section 201 was enacted to

“deal comprehensively with the problem of enforcement of

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BENNETT V. BANK MELLI 7

judgments rendered on behalf of victims of terrorism . . . by

enabling them to satisfy such judgments through the

attachment of blocked assets of terrorist parties.” H.R. Rep.

No. 107-779, at 27 (2002) (Conf. Rep). “Blocked assets” are

those that have been seized or frozen by the federal

government. The TRIA provides that “the blocked assets of

[a] terrorist party (including the blocked assets of any agency

or instrumentality of that terrorist party) shall be subject to

execution.” Terrorism Risk Insurance Act of 2002, Pub L.

No. 107-297, § 201(a), 116 Stat. 2322, 2337 (codified at

28 U.S.C. § 1610 Note “Satisfaction of Judgments from

Blocked Assets of Terrorists, Terrorist Organizations, and

State Sponsors of Terrorism”).

Section 1610(g), enacted in 2008 as an amendment to the

FSIA, extended the TRIA’s abrogation of asset immunity to

funds that were not blocked. It provides that “the property of

a foreign state against which a judgment is entered under [this

statute], and the property of an agency or instrumentality of

such a state, including property that is a separate juridical

entity or is an interest held directly or indirectly in a separate

juridical entity, is subject to attachment in aid of execution

. . . upon that judgment as provided in this section.” 

28 U.S.C. § 1610(g).

These two statutes give creditors a theoretical avenue to

collect on the judgments they’ve obtained. But, of course,

they have to find the money first—and Iranian assets within

the United States are notoriously hard to come by. An

opportunity arose in 2007, when the Department of Treasury

issued a blocking order prohibiting certain Iranian assets in

the United States from being transferred back to Iran. That

blocking order was based on Iran’s illicit nuclear program,

not its state-sponsored terrorism. Nonetheless, it meant that

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8 BENNETT V. BANK MELLI

various financial institutions had money owed to Iran sitting

in accounts within the United States. The creditors here saw

a rare chance to collect on their judgments and filed a

complaint seeking access to $17.6 million in blocked assets

held by Visa and Franklin,1but owed to Bank Melli—Iran’s

national bank. Fearing they might be liable to Bank Melli if

they simply handed the money over to the creditors, Visa and

Franklin responded by filing a third-party complaint to

interplead Bank Melli and obtain final resolution of who was

entitled to the funds. Visa and Franklin deposited the funds

into the district court’s registry. Bank Melli made an

appearance and moved to dismiss. The district court denied

that motion but certified its order for interlocutory appeal

under 28 U.S.C. § 1292(b). We review de novo. See Colony

Cove Props., LLC v. City of Carson, 640 F.3d 948, 955 (9th

Cir. 2011).

II. Discussion

Bank Melli makes four distinct arguments as to why the

creditors shouldn’t be able to collect from the funds held by

Visa and Franklin. First, it argues that the assets are

protected by sovereign immunity notwithstanding the TRIA

and section 1610(g), because those statutes waive sovereign

immunity only for the “terrorist party”—Iran—and Bank

Melli is a separate juridical entity from Iran. Second, it

asserts that Federal Rule of Civil Procedure 19 requires

dismissal of this entire action, because Bank Melli is an

indispensable party that cannot be joined. Third, it argues

 

1

 Visa allegedly owes Bank Melli the money for the bank’s facilitation

of Visa cards in Iran. When the blocking order was issued, Visa invested

the assets owed to Bank Melli in a mutual fund held by Franklin, an

investment company.

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BENNETT V. BANK MELLI 9

that applying the TRIA and section 1610(g) to the judgments

at issue here would be impermissibly retroactive, because the

creditors obtained their judgments against Iran before the

statutes’ enactment. And, finally, Bank Melli claims that the

frozen assets aren’t subject to the TRIA or section 1610(g)

because those statutes extend only to assets “owned” by the

foreign entity. Because the assets here are technically in the

possession of Visa and Franklin, Bank Melli argues that they

aren’t yet “owned” by Bank Melli.

1. Foreign Sovereign Immunity

Bank Melli argues that the TRIA and section 1610(g) do

not abrogate the asset immunity of all of a terrorist state’s

instrumentalities, only those that are alter egos of the state. 

For this proposition, Bank Melli relies principally on the

Supreme Court’s holding in First National City Bank v.

Banco Para El Comercio Exterior de Cuba (“Bancec”), that

“governmentinstrumentalities established as juridical entities

distinct and independent from their sovereign should

normally be treated as such.” 462 U.S. 611, 626–27 (1983). 

Under Bancec, the only conditions under which an

instrumentality may be equated with the sovereign are

(1) when it is “so extensively controlled by its owner that a

relationship of principal and agent is created” or (2) when

failure to regard them as equivalent “would work fraud or

injustice.” Id. at 629 (internal quotation marks omitted). 

Bank Melli contends that the TRIA and section 1610(g)

incorporate Bancec’s distinction between instrumentalities

that are separate juridical entities and those that are alter egos,

and abrogates immunity only as to those instrumentalities

that, unlike Bank Melli, fall within Bancec’s two exceptions.

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10 BENNETT V. BANK MELLI

We cannot reconcile Bank Melli’s argument with the

plain text of either statute. Section 201(a) of the TRIA

specifically states that “the blocked assets of [a] terrorist

party (including the blocked assets of any agency or

instrumentality of that terrorist party) shall be subject to

execution.” § 201(a) (emphasis added). Bank Melli argues

that the parenthetical phrase is merely illustrative and does

not purport to expand the meaning of “terrorist party” beyond

Bancec. But we must assume Congress meant what it said

when it used the term “any agency or instrumentality.” See

United States v. Gonzales, 520 U.S. 1, 5 (1997). “Read

naturally, the word ‘any’ has an expansive meaning, that is,

‘one or some indiscriminately of whatever kind.’” Id.

(quoting Webster’s Third New International Dictionary 97

(1976)). Because “Congress did not add any language

limiting the breadth of that word,” we must read the statute as

referring to all instrumentalities. Id.

Furthermore, Bank Melli’s interpretation “flouts the rule

that a statute should be construed so that effect is given to all

its provisions, [and] no part will be inoperative or

superfluous.” Clark v. Rameker, 134 S. Ct. 2242, 2248

(2014) (internal quotation marks omitted). Because an alter

ego under Bancec is the terrorist party, there would be no

need for Congress to separately provide for attachment

against instrumentalities unless it sought to extend coverage

to those instrumentalities that cannot be equated with the

terrorist party itself.

We therefore agree with the Second Circuit that it is

“clear beyond cavil that Section 201(a) of the TRIA provides

courts with subject matter jurisdiction over post-judgment

execution and attachment proceedings against property held

in the hands of an instrumentality of the judgment-debtor,

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BENNETT V. BANK MELLI 11

even if the instrumentality is not itself named in the

judgment.” Weinstein v. Islamic Republic of Iran, 609 F.3d

43, 50 (2d Cir. 2010).

Congress spoke even more clearly in section 1610(g). 

Section 1610(g) allows attachment against property held by

an instrumentality “that is a separate juridical entity,”

“regardless of” the five factors that several courts—including

ours—have considered when deciding whether an

instrumentality is an alter ego under Bancec. See Flatow v.

Islamic Republic of Iran, 308 F.3d 1065, 1071–72 & n.9 (9th

Cir. 2002). By specifically referencing—and

disavowing—Bancec’s test, section 1610(g) makes

unmistakably clear that whether or not an instrumentality is

an alter ego is irrelevant to determining whether its assets are

attachable.

Bank Melli argues that section 1610(g) doesn’t permit

attachment because the 1955 Treaty of Amity between the

U.S. and Iran requires that Iranian companies “have their

juridicial status recognized,” prohibits “unreasonable or

discriminatorymeasures” against them and requires that their

property be protected in accordance with international law. 

Treaty of Amity, Economic Relations and Consular Rights

Between the United States of America and Iran, Aug. 15,

1955, 8 U.S.T. 899, 902–903. But we cannot read a 60-yearold treaty provision as barring application of the plain text of

a later-enacted federal law. See Breard v. Greene, 523 U.S.

371, 376 (1998) (per curiam). In any event, there’s nothing

unreasonable, discriminatory or in violation of international

law about waiving sovereign immunity for terrorism-based

judgments. Bank Melli’s assets aren’t subject to attachment

because it’s an Iranian company, but because it’s an

instrumentality of a state that has sponsored terrorism.

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12 BENNETT V. BANK MELLI

Finally, Bank Melli reads section 1610(g)—which allows

attachment in aid of execution upon judgments “as provided

in this section”—to mean that attachment immunity is

abrogated only if some other provision of section 1610

independently authorizes the attachment. But the other

provisions of section 1610 that abrogate attachment immunity

already apply to instrumentalities with separate juridical

status. See 28 U.S.C. § 1610(a) (abrogating attachment

immunity of property of a foreign state when the property is

“used for commercial activity in the United States”); id.

(defining “foreign state” by reference to section 1603(a),

which states that a “foreign state” includes an instrumentality

“which is a separate legal person”); id. § 1610(b) (abrogating

attachment immunity of an instrumentality “engaged in

commercial activity in the United States”). And the plain text

of section 1610(g) requires only that the foreign state be

subject to a section 1605A judgment before the property of an

instrumentality becomes available for collection. Id.

§ 1610(g) (subjecting to attachment “the property of a foreign

state against which a judgment is entered under section

1605A, and the property of an agency or instrumentality of

such a state” (emphasis added)). Thus, reading section

1610(g) to require attachment immunity to be grounded in

some other subsection of section 1610 would render section

1610(g) a nullity.

In short, both the TRIA and section 1610(g) provide

independently sufficient grounds for abrogatingBank Melli’s

asset immunity for terrorism-based judgments.

2. Rule 19

Federal Rule of Civil Procedure 19 requires that a person

be joined if he “claims an interest relating to the subject of

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BENNETT V. BANK MELLI 13

the action and is so situated that disposing of the action in the

person’s absence may . . . impair or impede the person’s

ability to protect the interest[] or . . . leave an existing party

subject to a substantial risk of incurring double, multiple, or

otherwise inconsistent obligations because of the interest.” 

Fed. R. Civ. P. 19(a). “If a person who is required to be

joined if feasible cannot be joined, the court must determine

whether, in equity and good conscience, the action should

proceed among the existing parties or should be dismissed.” 

Id. 19(b). Bank Melli argues that this case must be dismissed

because it is an indispensable party to the lawsuit that cannot

be joined, and the action cannot “in equity and good

conscience” proceed without it. According to Bank Melli, the

case is controlled by the Supreme Court’s holding in Republic

of Philippines v. Pimentel, that when “sovereign immunity is

asserted, and the claims of the sovereign are not frivolous,

dismissal of the action must be ordered where there is a

potential for injury to the interests of the absent sovereign.” 

553 U.S. 851, 867 (2008).

Pimentel is inapposite. In Pimentel, the judgment at issue

wasn’t against the sovereign—the Republic of Philippines—

but rather against the estate of its former dictator, Ferdinand

Marcos. The Philippines asserted a right to certain of

Marcos’s assets being held in the United States, out of which

various creditors were trying to satisfy their judgments

against Marcos. No one disputed that the Philippines was a

required party, because—as a type of creditor itself—it

clearly had a legal interest in how the funds were disposed of. 

Nor was there a dispute that the Philippines was sovereignly

immune and therefore couldn’t be joined.

Here, by contrast, the sovereign is a judgment debtor, not

a creditor. Iran has already had a full and fair opportunity to

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14 BENNETT V. BANK MELLI

assert its interests in court. It is undisputed that Iran owes

money to the creditors and that the money held by Visa and

Franklin is owed to Iran. Iran, therefore, has no further

interests to assert. Nor does Bank Melli have an independent

interest to assert: Because its attachment immunity with

respect to the funds held by Visa and Franklin is abrogated by

the TRIA and section 1610(g), Bank Melli is Iran for the

limited purposes of this interpleader action. This is solely a

collection proceeding, and a judgment debtor isn’t generally

considered an indispensable party to an action to enforce its

debts. See Restatement (Second) of Judgments § 8 (1982)

(suggesting courts may enforce attachment of property absent

the judgment debtor because he “may make an appearance to

contest the court’s jurisdiction over the property without

thereby submitting to the jurisdiction of the court”); cf. Cal.

Civ. Proc. Code § 708.220 (“judgment debtor . . . [is] not an

indispensable party” to an enforcement proceeding). 

Therefore, none of Rule 19(a)’s prerequisites for dismissal

has been met: The court can “accord complete relief among

existing parties”; Bank Melli’s ability to protect its interests

isn’t impaired; and there’s no “substantial risk of an existing

party incurring double, multiple, or otherwise inconsistent

obligations.” Fed. R. Civ. P. 19(a).

Even if that were not so, Rule 19(a) is inapposite because

Bank Melli can be joined in this action. Unlike the

Philippines in Pimentel, Bank Melli is not protected by

sovereign immunity in this proceeding, because, as discussed

above, Congress has abrogated the immunity of

instrumentalities of terrorist parties in collection actions.

Finally, to hold, as Bank Melli urges, that Rule 19

requires dismissal in this case would effectively eviscerate

section 201 of the TRIA and section 1610(g). A collection

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BENNETT V. BANK MELLI 15

action against a state inherently involves attempting to obtain

funds owned by an entity capable of asserting sovereign

immunity. If dismissal is required every time such an entity

sets forth a “non-frivolous” argument as to why it shouldn’t

have to pay, collection will be impossible as a practical

matter. Nothing in Pimentel or Rule 19 dictates such an

absurd result.

3. Retroactivity

Bank Melli next argues that the creditors cannot use the

TRIA and section 1610(g) to collect on their judgments

because those judgments predated the enactment of the two

collection statutes. When, as here, Congress has not

explicitly provided for a statute’s retroactive effect, we must

ask whether retroactive application “would impair rights a

party possessed when he acted, increase a party’s liability for

past conduct, or impose new duties with respect to

transactions already completed.” Landgraf v. USI Film

Prods., 511 U.S. 244, 280 (1994). Bank Melli argues that if

the TRIA and section 1610(g) permit attachment of its assets,

it “would go from having no liability for [conduct predating

the statutes’] enactment to being liable for the entirety of the

resulting judgments.”

But the TRIA and section 1610(g) do not impose

retroactive liability on Iran—they merely provide a means of

collection for judgments where liability has already been

established. Iran was liable for its terrorism-related conduct

long before the TRIA and section 1610(g) were enacted. 

Iran’s liability results from the former 28 U.S.C. § 1605(a)(7)

(now section 1605A), which permitted U.S. citizen terrorism

victims to bring suit against Iran in federal court. That statute

was in force at the time of Iran’s unlawful conduct. The

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16 BENNETT V. BANK MELLI

TRIA and section 1610(g) do not attach any additional

penalty to that conduct—they only create an avenue for

creditors to obtain money they are already owed.

Bank Melli’s real argument, therefore, must be that, even

though Iran knew its conduct was unlawful and subject to

liability in U.S. courts at the time it sponsored the relevant

terrorist attacks, it did not know that victims would have the

precise avenue for collection they now have. That hardly

implicates the central concern of Landgraf: that the conduct

a defendant engaged in was innocent at the time it occurred. 

Here, Iran knew it was violating the law and that it could be

liable; it just believed that the procedures that existed when

it acted would be insufficient to permit victims to collect on

their judgments. There is no permissible reliance interest in

the inadequacy of enforcement procedures. Iran assumed the

risk that the money it owed in damages based on its

sponsorship of terrorism would eventually be collected upon. 

Indeed, it’s clear that the TRIA and section 1610(g) were

designed precisely to provide an avenue to recovery for

existing claimants with judgments against terrorist states. See

Estate of Heiser v. Islamic Republic of Iran, 807 F. Supp. 2d

9, 26 (D.D.C. 2011). To say that all terrorist attacks prior to

the enactment of the collection statutes cannot result in

collectible judgments finds no basis in the Supreme Court’s

retroactivitycases and runs counter to Congress’s clear intent.

4. Ownership of the Assets

Bank Melli argues that the TRIA and section 1610(g)

apply only to assets “owned” by Bank Melli and—while it

concedes it has a 100% beneficial interest in the assets held

by Visa and Franklin—it claims it doesn’t “own” them yet

because the funds have been blocked.

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BENNETT V. BANK MELLI 17

But there’s more to ownership than physical possession. 

The question of how to determine the funds’ ownership is

controlled by our holding in Peterson v. Islamic Republic of

Iran, 627 F.3d 1117, 1130 (9th Cir. 2010). There, we noted

that “[e]nforcement proceedings in federal district court are

governed by the law of the state in which the court sits”

unless a federal statute dictates otherwise. Id. We held that

the “FSIA does not provide methods for the enforcement of

judgments against foreign states, only that those judgments

may not be enforced by resort to immune property.” We

therefore concluded that “California law on the enforcement

of judgments applies.” Id. Finally, we noted that “California

enforcement law authorizes a court to ‘order the judgment

debtor to assign to the judgment creditor . . . all or part of a

right to payment due or to become due, whether or not the

right is conditioned on future developments.’” Id. at 1130–31

(quoting Cal. Civ. Proc. Code § 708.510(a)) (emphasis

added).

Those holdings collectively dispose of Bank Melli’s

argument here. Because the FSIA doesn’t provide a method

for enforcement, California law applies to this proceeding

and, under California law, money “owed to” Bank Melli may

be assigned to judgment creditors. The fact that Bank Melli

is not yet in physical possession of the funds is immaterial.

* * *

Bank Melli has set forth numerous creative arguments as

to why it shouldn’t be liable for Iran’s debt. But this is an

arena in which Congress has spoken with unmistakable

clarity. Section 201 of the TRIA and 28 U.S.C. § 1610(g)

permit victims of terrorism to collect money they’re owed

from instrumentalities of the state that sponsored the attacks. 

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18 BENNETT V. BANK MELLI

Nothing in the text of the FSIA, Rule 19 or the Supreme

Court’s retroactivity cases compels a different result. The

district court correctly denied Bank Melli’s motion to

dismiss.

AFFIRMED.

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