United States Court of Appeals

Fifth Circuit



## FILED

July 19, 2004

Charles R. Fulbruge III

Clerk 

## In the 

# United States Court of Appeals

for the Fifth Circuit

_______________



### m 03-10994



### m 03-20984

_______________



### E DWENA 

### H EGNA 

### ; I NDIVIDUALLY AND AS 

### E XECUTRIX OF

THE 

### E STATE OF 

### C HARLES 

### H EGNA 

### ; C RAIG 

### H EGNA 

### ; S TEVEN 

### H EGNA 

### ;

L YNN 

### H EGNA 

### ; P AUL 

### H EGNA



### ,

Plaintiffs-Appellants,

VERSUS



### I SLAMIC 

### R EPUBLIC OF 

### I RAN 

### ;

I RANIAN 

### M INISTRY OF 

### I NFORMATION AND 

### S ECURITY



### ,

Defendants-Appellees,



### U NITED 

### S TATES OF 

### A MERICA



### Movant-Appellee.

_________________________

Appeals from the United States District Court

for the Northern District of Texas

and the United States District Court

for the Southern District of Texas

_________________________2

Before S MITH

, P RADO

, AND P ICKERING

, Circuit Judges.

J ERRY E. S MITH , Circuit Judge:

Charles Hegna died at th e hands of

terrori sts who received partial s upport f rom

the Islamic Republic of Iran. Members of the

Hegna family have attempted to collect a

default judgment against property previously

owned by Iran and currently held by the United States. Based on domestic statutes and

international treaties, the two district courts a

quo quashed wr it s of attachment and

e xecution issued respectively against two

parcels of real property

. Finding no error, we

affirm both judgments.

I.

A.

The Federal Sovereign Immunities Act

(“FSIA”) articulates the general rule that “a

foreign state shall be immune from the

jurisdiction of the courts of the United States

and of the States.” 28 U.S.C. § 1604. As part

of the 1996 Antiterrorism and Effective Death

Penalty Act (“AEDPA”), Congress created an

exception for state-sponsored te rrorist actions.

28 U.S.C. § 1605(a)(7). 1 To be subject to

§ 1605(a)(7), a nation must be designated as a

state sponsor of terrorism. § 1605(a)(7)(A). 2 The Victims of Traff icking and Violence

Protecti on Act of 2000 (“VTVPA”), Pub. L.

No. 106-386, § 2002, 114 Stat. 1464, 1541

(2000), created a regime whereby a party who

secured a judgment under § 1605(a)(7) could

receive payment from the Secretary of the

Treasury. In exchange for t hat payment, the

recipient would relinquish certain rights to collect against the terrorist state. 3

The Terrorism Risk Insurance Act

(“TRIA”), Pub. L. No. 107-297, § 201(a), 116

Stat. 2322 (2002), p ro vided additional rights

to parties possessing judgments under § 1605-

(a)(7). TRIA states that a successful plaintiff

ma y attach and execute against the “blocked

assets” 4 of terrorist parties. 5

Additionally, TRIA § 201(c)(4) amends the

VTVPA by inserting a se ct ion describing the

procedures the government must follow in the

event available funds cannot sat isfy all the

outstanding requests for payment for § 1605-

(a)(7) claims. Although those receiving partial

payme nt s do not have to relinquish as many

1 “A fo reign state shall not be immune . . . in

any case . . . in which money damages are sought

against a foreign state for personal injury or death

that was caused by an act of torture, extrajudicial

killing, aircraft sabotage, hostage taking, or the

provision of material support or resources” in aid

of a terrorist action. 28 U.S.C. § 1605(a)(7).

2 The Secretary of State has designated Iran as

a state sponsor of terrorism. 49 Fed. Reg. 2836-02

(Jan. 23, 1984). 3 Additio n ally, VTVPA § 2002(b)(2) lists the

source s of funding for payments arising out of

judgments against Iran: “rental proceeds . . . from

Iranian diplomatic and consular property located in

the United States; and

. . . funds not otherwise

made available in an amount not to exceed the total

of the amount in the Iran Foreign Military Sales

Program account within the Foreign Military Sales

Fund[.]”

4 TRIA § 201(d)(2) defines “blocked asset.”

5 “ [I]n every case in which a person has obtained a judgment against a te rrorist party on a

claim based upon an act of terrorism[,] the blocked

assets of that terrorist party

. . . shall be subject to

execution or attachment in aid of execution in order

to satisfy such judgment . . . .” TRIA § 201(a).3

rights as they would have forfe ited had they

received full payment via the VTVPA, the

recipients must give up some recovery rights.

VTVPA § 2002(a)(2)(C) requi res the

rel inquishment of punitive damages against a

terrorist entity, and § 2002(a)(2)(D) prevents

parties from executing or attachi ng property

“that is[, inter alia ,] at issue in claims against

the United States before an international

tribunal[.]”

Thus

, in response to a family member’s

death, a party may seek a judgment against a

state sponsor of terrorism. The party may satisfy such a judgment by seeking and receiving

payment unde r t he VTVPA and by attaching

and enforcing against “blocked assets”

pursuant to the TRIA.

B.

In 1984, Hezbollah terrori sts hijacked a Kuwaiti airliner and diverted it to Tehran, fatally

shooting Char les Hegna in the process. In

2001, the Hegna family sou ght and obtained,

pursuant to 28 U.S.C. § 1605(a)(7), 6 a default judgment for $42,000,000 in compensatory

damages and $333,000,000 in punitive

damages aga i nst the Islamic Republic of Iran

and the Iranian Ministry

o f Information and

Security. 7

Relying upon TRIA § 201(a), the Hegnas

have attempted to attach and execute against

numerous properties that Ir an owned at the

time of the 1979 hostage crisis. 8 Specifically,

6 Few courts of appeals have considered the

application of § 1605(a)(7). But see Acree v. Republic of Iraq , 2004 U.S. App. LEXIS 10972

(D.C. Cir. June 4, 2004) (vacating a § 1605(a)(7)

award for failing to state a claim); Cicippio-Puleo

v. Islamic Republic of Iran , 353 F.3d 1024 (D.C.

Cir. 2004). Cicippio-Puleo held:

[N]either 28 U.S.C. § 1605(a)(7) nor the

Flatow Amendment [, which granted punitive

damages pursuant to § 1605(a)(7)], nor the

two considered in tandem, creates a private

right of action against a foreign government.

Section 1605(a)(7) merely waives the

immunity of a foreign state without creating

a cause of action against it, and the Flatow

Amendment only provides a private right of

(continued...) 6 (...continued)

action against officials

, employees, and

agents of a foreign state, not agains t the

foreign state itself.

Id . at 1033.

Although Acree and Cipio considered statut e s

at issue in the current appeal, th ey involved

different circumstances and issues. Both cases

considered the validity of the underlying judgment.

In the instant matter, neither party contests the

va lidity of the Hegna family’s original judgment.

Because neither side has briefed the issue or had an

opportunity to argue the point diligently, we choose

only to address the family’s ability to satisfy its

judgment against th e se two particular pieces of

property. If the United States wishes to argue the

reach of § 1605(a)(7), it may do so in a subsequent

case.

7 Hegna v. Islamic Republic of Iran , No.

1:00CV00716 (D.D.C. Feb. 7, 2002).

8 In the midst of the Iranian revolution of 1979,

numerous “students” aligned with Ayatollah Kohmeini took Americans hostage in the American

Embassy. The President froze all property and

assets of the government of Iran that fell within or

would fall within the jurisdiction of the United

States. Exec. Order No. 12170, 44 Fed. Reg.

65729 (Nov. 14, 1979). The United States ultimat ely severed diplomatic and consular relations

(continued...)4

they have pursued properties in New York, 9

Illinois, 10 Maryland

, 1 1 and Texas. Additionally,

they filed for a payment pursuant to the

VTVPA. 12 Although the two cou nt ries promised, as

part of the Algiers Accords, 13 to exchange

seized co nsular property, each has retained

previously-seized property

. Consequently, the

United States acts as a custodian of the

property that the Hegnas have attempted to

attach, and , in every case, has moved to

invalidate the family’s actions.

In t he instant matter, the family attached

two pieces of Iranian property located in Texas. One, lo cat ed in Lubbock, served as a

home fro m which the then-Crown Prince of

Iran could receive fighter pilot training. 14 The

property located in Houston previously served

as the residence of the General Consul o f 8 (...continued)

with Iran. The hostage crisis ended with the signing of the Algiers Accords in January 1981.

9 Hegna v. Isla mic Republic of Iran , 299 F.

Supp. 2d 229 (S.D.N.Y. 2004). The district court

denied the application for attachment based on the

conclusion that the H egnas had relinquished the

right to attach the New Yorkproperty after accepting payment via the VTVPA.

10 H egna v. Islamic Republic of Iran

, 2003

U.S. Dist. LEXIS 14039 (N.D. Ill. Aug. 11, 2003).

The magistrate judge recommended deny ing the

United States’ motion to quash the family’s writ of

attachment. The Illinois proceedings occurred after

the Hegnas had applied for payment pursuant to

VTVPA but before payment from the government.

Becaus e the Hegnas sought to rescind their application for payment, the magistrate judge recommended staying further proceedings until the

resolution of the VTVPA payment is sue. As discussed, infra

, the Hegnas received payment s in

July and November 2003.

11 Hegna v. Islamic Republic of Iran , 287 F.

Supp. 2d 608 (D. Md. 2003). The district court

granted the United States’ motion to quash the family’s writ after concluding that the property at issue

fell outside TRIA’s definition of “blocked asset.”

12 The Hegnas argue that the Department of the

Treasury issued guidelines that ordered plai n tiffs

such as themselves to apply for the VTVPA funds.

Because the language of the VTVPA states that the

payment reg ime initiates only “at the person’s

election,” the family’s argument warrants slightly

more discussion. VTVPA, § 2002(a)(1).

We agree that the Treasury Guideline does not

stand as a model of clarity, directness, o r help-

(continued...) 12 (...continued)

fulness. The notice, however, contains ample language to indicate that a party may file for a VTVPA

payment and does not indicate that a plaintiff may

pursue relief only through the VTVPA.

13 In part, the Accords established the Iran-United States Claims Tribunal, a nine-member

commission charged with resolving “claims of

United States nationals against Iran and of Iranian

nationals against the United States[;] certain ‘official claims’ between the two Governments relating

to the purchase and sale of goods and services;

disputes between the two Governments concerning

the interpretation or performance of the Algiers

Declarations; and certain claim s between United

States and Iranian banking institutions.” IranUnited States Claims Tribunal Background

Information, availabl e at http://www.iusct.org/-

background-english.html (accessed June 18, 2004).

14 The Crown Prince receivedtraining at Lubbock’s Reese Air Force Base, which was closed in

1997.5

Iran. 15

With respect to the Lubbock property, the

district court granted a writ of attachment and

a m o t io n for expedited levy of a writ of

executi on 1 6 and scheduled the sale of th e

property for Augu s t 26, 2003. The United

States provided an initial VTVPA payment to

the Hegnas o n July 30, 2003, and filed an

emergency motion to void the sale on August

22, 2003. Without pro viding a written

analysis, the district court granted the motion

to void the levy and t he sale on August 25,

2003.

With respect to the Houston property

, the

district court issued a writ of execution on November 27, 2002. After the United States

moved to quash the writ, the district court referred the ma tter to a m agi strate j udge, who,

on August 21, 2003, concluded that the

proper t y fell within an exclusion to the

“blocked asset ” definition in TRIA § 201(d)-

(2)(B)(ii) and recommend ed that the district

court quash the writ. The district court adopted the recommendations without amendment.

The Hegnas appeal the district courts’ failure

to enforce the original writs of attachment and

execution.

II.

In each case, the district court granted a

dispositive motion by terminating the relevant writ. The respective cases, however, present

distinct questions of law. With respect to the

Houston property

, we must determine whether

the property fits within t he “blocked asset”

exclusion in TRIA § 201(d)(2)(B)(ii). Wit h

respect to the Lubbock property

, we must decide exactly how a partial payment pursuant to

VTVPA and TRIA affects a party’s abilit y to

collect against non-consular property

. We review the district court’s legal analyses de novo

. K ennedy v. Tangipahoa Paris h Library

Bd. of Control

, 224 F.3d 359, 365 (5th Cir.

2000).

III.

By requesting and receiving partial payment

a ccording to the terms of the VTVPA, the

Hegnas relin quished the ability to enforce

against the Lubbock property

. The parties do

not disagree that t he Hegnas applied for

payment from the Secretary of the Treas u ry,

pursuant to VTVPA § 2002(a)(1), 17 and that

they received a partial payment before the sale

of the Lubbock property.

The Hegnas challenge the order to quash on

three grounds. First, they maintain that the

partial payment received on July 30 does not

trigger the relinquishment provisions of the

amended VTVPA. Second, they assert that

any relinquishment may occur only

pro spectively and cannot apply to propert y

already attached and set for sale. Third, they

claim that any possible relinquishment does not

apply t o the Lubbock property, because such

property is not “a t issue” before an

15 Although the two properties are the subjects

of two separate actions and are located in different

federal judicial districts, we consolid a ted the

matters for argument and dispositi on. The cases

present similar questions regarding the same set of

statutes.

16 The United States unsuccessfully opposed the

Hegna family’s motion. 17 Because the Secretary of the Treasury could

not make a full payment and gave the family only

a partial payment, th e a mended portions of

VTVPA § 2002(d)(5)(A) and (d)(5)(B), apply.6

international tribunal. 18 To affirm the quashing

of t he writ of execution, we must agree with

the district court on all three matters. 19

A.

T he Hegnas’ acceptance of a part ial

payment triggered the relinquishment

provisions of the VTVPA. Amended VTVPA

§ 2002(d)(5) states that

[a]ny p erso n receiving less than the full

amount of compensatory damages awarded

to that party in a judgment . .

. shall not be

required to make the [relinquishme nt set

forth in previous sections,] except that such

person shall be required to relinquish rights

set forth

– (A) in subsection (a)(2)(C); and

(B) in subsection (a)(2)(D) with respect to

enforc ement against property that is at issue in claims against the United States before an international tribunal or that is the

subject of awards by such tribunal.

The phrase “such person” r efers to the individual “receiving less than the full amount of

compensatory damag e s.” No other person is

referred to in that subsect ion. Thus, a party

receiving partial payment does not have to relinquish his rights t o compensatory damages

but must give up those rights listed in the two

subsecti o ns. Subsection (a)(2)(C) concerns

punitive damages, and subsection (a)(2)(D)

addresses recovery against the “at issue”

properties.

The Hegnas would have us draw a line between a partial-partial payment 

### SS one that falls

below the statutorily-defined po rtion that the

government must pay 

### SS

and a completely-paid

partial payment. In essence, the Hegnas contend that they should have received more than

the government paid them and that the insufficiency of the amount allowed them to pursue

the sale of the Lubbock property.

That theory fails for two reasons. First, the

statute does not draw a distincti on am ong

types of partial payments, but mer e ly states

that “[a]ny person receiving less than the full

amount” will relinquish punitive and “at issue”

ri ghts. The receipt of any parti al

payment 

### SS

even $1 

### SS

would limit the Hegnas’

recovery options.

Secondly, the governmen t eventually paid

the Hegnas their f

ull share of their

proporti o nal payment. The second payment

occurred in November 2003. Thus, whatever

relinquishment provisions are contained within

the partial payment regime apply to the

Hegnas.

B. 18 Specifically, the Hegnas argue that “[u]n til

the matter of the [Iran-United States Claims] Tribunal’s subject matter jurisdiction over the Lubbock Property is determined, Iranian properties in

the United States, including the Lubbock Property,

are simply not property that is ‘at issue’ before the

Tribunal[.]”

19 Though the amended VTVPA requires a party to relinquish only its general claims for punitive

damag es SS

VTVPA § 2002(a)(2)(C) SS it also mandates relinquishment of all claim s SS punitive or

otherwise SS

against property “at issue in claims

against the United States.” § 2002(a)(2)(D). Because the amended VTVPA § 2002(d)(5) expressly

states that one receiving less than the f ull amount

of compensatory damages “shall not be required to

make the [re linquishment] set forth in subsection

(a)(2)(B) or with respect to subsection (a)(2)(D),”

a party may continue to pursue compensat o ry

awards. That party, however, may not pursue

those awards against “at issue” property. Thus, we

must address whether the Lubbock property is “at

issue.”7

Although receiving the VTVPA payment

causes them to relinquish “all rights” to

execu t e against designated property, the

Hegnas advance a creative but questionable

argument that they still may sell the Lubbock

pro perty. Because payment did not arrive

until after the di stri ct court attached the

property and scheduled a sale, the Hegnas

maintain that the sale should proceed. 20 Under

this theory, Texas law 21 places the court’s levy

against the Lubbock property in custodia legis

and ties all sales proceedings to th e date of

seizure 

### SS namely, July 2, 2003. 22

The Hegnas support this interesting rift in

the space-time-continuum by citing a 1927 Fifth Circuit case 23 that concerned bankruptcy

and an 1884 Supreme Court opinion 24 that addr essed competing judgment liens from

Tennessee. These cases do not remotely apply

to a situation resembling the instant case. 25

T he family’s interesting theory would require the sale to proceed regardless of the correctness of the attachment or the validity of the

sale. Courts would not have the ability to alter

their rulings in the event of a change in

circumstances. The situat ion, however, did

change once the United States made a partial

VTVPA payment to the Hegnas.

Because the family members already

applied for a payment from the govern ment,

they should not argue with the government’s

attem pts to hold t hem to the terms of the

payment. Receipt o f t he partial payment

forced them to relinquish “ all rights to execute

against or attach property that is at issue in

claims

. . . before an international tribunal[.]”

VTVPA § 2002(a)(2)(D) (emphasis added).

Assu ming, a rguendo

, that the Hegnas’

argument has some validity and that the “right

. . . to execute” now lies strictly with the district court, the court certainly poss e sses the

a bilit y to revisit its ruling. A court may “relieve a party or a party’s legal rep resentati ve

from a final judgment, order, or proceeding”

for a variety of reasons, including the open20 The Hegnas contend that, “[s]ince the date of

actual sale relates back to the levy date, the date of

sale of the Lubbock Property is July 2, 200[3].”

21 Th e Hegnas cite the general rule that “[t]he

procedure on execution

. . . shall be in accordance

with the practice and procedure of the state in

which the district court is held, existing at the time

the remedy is sought, except that any statute of the

United States governs to the extent that it is

applicable.” F ED

. R. C IV

. P. 69(a).

22 The Hegnas assert that the train toward judicial sale had proceeded past the point of no return:

“[W]hen the U.S. Marshal levied on the Lubbock

Property[,] the procedure for t aking the property

into the custody of the District Court was complete

. . . . All that remained to be done was the judicial

s ale, and V[TV]PA’s relinquishment provision s

have no application to post-levy sales.”

Additionall y, the Hegnas suppose that they

should have the right to pursue sale to satisfy the

full value of their judgment against Iran. As shown

in part III.A., supra

, however, even a partial

payment triggers the VTVPA’s full relinquishment

provisions. 23 Wilkinso n v. Goree , 18 F.2d 455, 456-57

(5th Cir. 1927).

24 Freeman v. Dawson

, 110 U.S. 264, 270

(1884).

25 Wilkinson relied on the workings of the former Bankruptcy Act and had no connection to enforcing judgments in Texas. F reeman has a similarly non-existent connection.8

ended “any

. . . reason just ifying relief from the

op eration of the judgment.” F E D

. R. C IV

. P.

60(b)

. See also F ED

. R. C IV

. P. 59(e)

(describing the period of time in which a party

must file a motion to alter or amend a

judgment). 26

The Hegnas’ theo ry places form above

c o mmo n sense and above the district court’s

abilit y to re-evaluate its ruling before the property is sold. Thus, we turn to whether the

Lubbock property fits within the “at issue”

language of § 2002(a)(2)(D).

C.

Because the Lubbock property was “at issue” in a claim before an international tribunal,

amended VTVPA § 2002(d)(5)(B) prevents

the Hegnas from executing on the property

. The United States asserts that the Lubbock

property is at issue in the Iran- United States

Claims Tribunal (“Claims Tribunal”). In

support, t he government offers a declaration

from Mark Clodfelter, who lists himself as the

“Assistant Legal Adviser for, and dire ctor of

the office of, International Claims and

Investment Disputes in the Office of the Legal

Adviser of the Department of State.”

The Hegnas respond by contending (1) that

the property cannot be “at issue” until after a

court determines its jurisdiction over the property; and (2) that the Claims Tribunal does not

have proper jurisdiction over the property

. 2 7 In support of their argument, the Hegnas offer

a definition from a 1979 edition of B LACK ’ S

L AW D ICTIONARY and citations to two Florida

state court opinions. “At issue,” however, inc ludes a broader swath of conflict than t h e

Hegnas assert. The most recent B LACK ’ S L AW

D ICTIONARY (8th ed. 2004) defines “at issue”

as “[t]aking opposite sides; under dispute; in

question.” Although the Unit ed States has

contested the jurisdiction of the Iran-United

States C laims Tribunal over the properties,

both matters c u rrently pend before that very

body. Even if the government ultimately prevails, the Lubbock property will have remained

“at issue” before the tribunal during the instant

appeal. 28

The only question with respect to t he “at

issue” analysis concerns the evidence that the

government has offered. The aforementioned

declaration from Clodfelter va guely but

coherently states his familiarit y with the Claims

Tri bunal and that the Lubbock property falls

within a list of pro perties “specifically

identified as the subject of the Tribunal case.”

Though Clodfelter’s declaration could have

included more specific information or

26 After the district court granted the motion to

void the sale, th e Hegnas filed a F E D

. R. C IV

. P.

59(e) motion.

27 In a related matter, the United States has asserted that consular property should fall under the

Vienna Convention on Consular Rel a tions and

(continued...) 27 (...continued)

should not be subject to the Claims Tribunal.

28 The Claims Tribunal has existed since July 1,

1981, and, as of December 31, 2003, has finalized

approximately 3,935 claims. Iran-United States

Claims Tribunal Background Information,

available at http://www.iusct.org /background-english.html ( accessed June 18, 2004); Iran-United

States Claims Tribunal Quarterly Communique of

Jan. 20, 2004, http://www.iusct.org-

/communi q ue-english.pdf (accessed June 18,

2004). It apparently has not, however, addressed

the Lubbock property.9

documentary support, 29 the Hegna s did not

deny the substan c e of the declaration in their

response, so they are for eclosed from

requesting a hearing to offer additional

evidence.

Consequen t ly, t he Hegna family’s

acceptance of partial paymen t tri ggered the

relinquishing pro visions of the VTVPA.

Because the acceptance required the family to

relinquish all rights to attach and execute the

judgment, the Hegnas, through the court,

cannot sell the property

. Finally, because the

Lubbock property currently s tands at i ssue

before an international tribunal, VTVP A §

2002(a)(2)(D) and (c)(5)(B) prevent the

Hegnas from attaching or executin g any

further judgments against that property.

IV.

The government argues that the VTVPA

payment bars the attachment and sale of the

Houston prope rt y in the same manner as for

the Lubbock property

. In considering the

Houston prope rt y, however, the magistrate

judge expressly avoided the issues discussed in

the analysis of the Lubbock property. 30 Before we may consider whether the

VTVPA blocks collection against the Houston

property

, we must det e rmine whether the

TRIA would allow the Hegnas to attach or execute against the property in the first place. In

essence, we must make the same inquiry as did

the magistrate judge. Although we may affirm

for any reason the record supp o rts, 31 we

choose to follow the mag istrate judge’s

analysis.

TRIA § 201(a) empowers an individual

who secures a judgment pursuant to 28 U.S.C.

§ 1605(a)(7) to attach and e xecut e against

“blocked assets

. . . to satisfy such judgment to

the extent of any comp ensatory damages.”

S ection 201(d)(2) defines “blocked asset” in

such a wa y that it includes the Houston

property

. 32 Section 201(d)(2)(B)(i i ), however,

exem p ts otherwise-attachable property from

t he “blocked asset” category. To fall within

the exemption, the property must satisfy two

criteria.

First, the proper t y must be “subject to the

Vienna Convention on

. . . Consular

Relations[.]” TRIA § 201(d)(2)(B)(ii).

29 We wonder why the United States could not

have offered some documentation to support Clodfelter’s declaration. Presumably, some formal document exists to report the proceedings of the

Claims Tribunal. When a family’s ability to

satisfy a legitimate judgment depends on the status

of a piece

of property, and when that status

requires evid e nce to make a determination, it is

preferable for the government to include more than

a declaration from one of its own employees.

30 “Having determined that Plaintiffs m ay not

execute against the [Houston] property, the court

need not reach the issue of whether Plaintiffs have

relinquished their right to execute on the judgment

(continued...) 30 (...continued)

based on their acceptance of payment under the

VTVPA on July 30, 2003.”

31 LLEH, Inc. v. Wichi ta County, Tex. , 289

F.3d 358, 364 (5th Cir. 2002).

32 “The term ‘blocked asset’ means– (A) any ass et seized or frozen by the United States under

section 5(b) of the Trading With the Ene m y Act

(50 U.S.C. App. 5(b)) or under sections 202 and

203 of the Inte

r na tional Emergency Economic

Powers Act (50 U.S.C. 1701; 1702)[.]” The President froze Iranian property pursuant to the Interna tional Emergency Economic Powers Act. S e e

supra note 8.10

Secondly, the property must be “used

exclusively for diplom at ic or consular

purpo ses.” I

d. Because we answer both

queri es in the affirmative, the Houston

property does not qualify as a “blocked asset”

for purposes of TRIA § 201(a).

A.

As to the first matter, a consul’s residence

falls within the sweep of the Vienna

Convention on Consular Relations (“VCCR”),

A pril 24, 1963, 21 U.S.T. 77, 596 U. N.T.S.

86 38. The signatories to the VCCR pledge

that, if one country severs consul ar rel ati ons

w it h another, the severing countries will “respect and protect the consular premises,

together with the property of the consular post

and the cons ular archives” of one another.

VCCR, art. 27(1)(a).

The definition of “co nsular post” includes

“any c onsul

ate-general, consulate, vice-consulate or consular agency.” VCCR, art. 1(1)(a).

A consulate typically includes a con s ul’s

residence, and no langu a ge in the treaty

deviates from

t his norm. B L

ACK ’ S L AW

D ICTIONARY (8t h ed. 2004) (defining

“consulate” as “the location of a consul’s

office or residence”).

Ad dit ionally, the United States has

interpreted the VCCR so as to include the

Houston property

. Not surprisingly, this court

has not heretofore considered the VCCR. 33

We not e t hat the federal courts have long

been loathe [ sic ] t o involve themselves in

matters of foreign policy, preferring to

leave such issues to the Executive Branch.

Therefore, we have always given substantial weight to the interpretation of a

treaty by the governme nt agency charged

with interpreting it.

More v. Intelcom Support Servs., Inc.

, 960

F.2d 466, 472 (5th Cir. 1992).

The United States, in its brief, “interpret s

the reference to ‘property of the consular post’

in Article 27(1)(a) to include real property

such as the Consul General’s residence at issue

here.” Alt hough the government certainly

could craft a self-serving or opportunistic interpretati on, the Hegnas have offe red no evidence to suggest such a motiv a tion and have

not given a ci tati on to a case or to a

compelling opposing argument.

Consequently, the langu age of the VCCR

and the government’s reasonable interpreation

of that language lead us to conclude that, under the VC CR, the United States has an

obl igati on to “respect and protect” property

that served as the residence of the Iranian

General Consul. The Houston property is

within the ambit of the VCCR. 34

B.

Altho u gh the government has rented the

Houston pro pert y to private parties and has

us ed some of those rental proceeds to satisfy

domestically-cre at ed obligations, it has used

33 The courts that have

considered it largely

have done so in the context of criminal trials. 34 The H egnas also have asserted that the

VCCR does not apply, b ecause TRIA applies

“Notwithstanding any other provision of law[.]”

TRIA § 201(a). The VCCR, however, does not

conflict with the TRIA. Instead, TRIA (1) gives

parties who have se cured judgments against terrorist states a new opportunity to satisfy their judgment; but also (2) attem

pts to insulate properties

subject to international agreements SS like the

VCCR SS from liquidation procedures.11

the consular residence “exclusively for

diplomatic or consular purposes.” The Hegnas

emphasize the fact of the rental and argue that

the government has used th e proceeds for a

nondiplomatic purpose. The magistrate judge

described the two uses of the proceeds

generated from renting the former consulate

home:

The funds received from the rentals have

been deposited in to segregated accounts,

with the funds necessary for repairs and

maintenance placed in a special Iranian consular account and the excess f u nds deposited into sep arate “blocked asset”

a ccounts. Funds in the blocked asset

accounts have recently been utilized to

compensate vict ims of terrorism under the

VTVPA.

Congress has directed the United States to

provide some of its rental proceeds to vict ims

of terrori sm. As part of its payment-and-relinquishment regime, the VTVPA desig n ates

“rental proceeds accrued on the date of the enactment of this Act from Iranian diplomatic

and consular property located i n t he United

States” as a prim ary source of funding.

VTVPA § 2002(b)(2)(A).

The mixed uses of

t he funds and the fact

that some funds have gone to satisfy a domestically-crafted payment reg ime require us to

consider wheth er t he United States has used

the Houston property “exclusively” for

diplomatic and consular purposes. Two

fa c tors ultimately weigh in favor of an

affirmative answer.

First, purpose differs from effect or result.

The United States may rent the property for

the purpose of using the funds to maintain and

preserve the property

pursuant to the VCCR. The rental, however, may generate additional

r evenue that, at Congressional direction, the

United States may allocate for other purposes.

The Hegnas have not shown evidence

regarding the government’s intent. Given such

a lack of evidence and the government’s

obligation to “respect and protect” the

p roperty pursuant to the VCCR, we are

reluctant to impute nondiplomatic motivations

to the government’s renting of the Houston

property

.

Secondly, the Hegnas read “diplomatic purpose” too narrowly. Altho ugh the United

States allocates funds to satisfy VTVPA judgments, and although the payment regime arises from a domestic payment arrangement, 35 the

issues certainly concern diplomatic matters.

The United States purportedly has attempted to fulfil the obligations of the VCCR. By

not selling the Houston property and by using

rental proceeds to carry out routi ne

m a intenance, the government “respect[s] and

protect[s]” the p ro perty presumably for the

time when th e two countries might resume

35 The entire exchange between Congr ess and

the Executive nicely illustrates the tensions that

may develop between governmental actors with differe nt institutional roles. Congress, through

AEDPA and TRIA, has attempted to provide greater opportunities for victims of terrorism to collect

on judgme nts against the states that sponsor and

support such actions. By exempting proper ties

subject to international tribunals and treaties such

as the VCCR, VTVPA and TRIA acknowledge the

Executive’s general power to administer diplomatic

affairs. U.S. C ONST

. art. II, § 2(2). The Executive

has taken full advantage of the congres sional

exception.12

diplomatic and consular relations. 36

The Executive Branch has simultaneously

attempt e d to compensate parties harmed as a

result of Iran’s support of terrorism and to adm inister consular property in accord with the

VCCR. By maintaining the property, the

United States has used the former G e neral

Consul’s residence within t h e terms of the

TRIA exclusion. Co nsequently, the district

court did not err in its determination that the

Houston property fell outside the definition of

a “blocked asset” and did not err in its grant of

the United States’ motion.

V.

Consequently, the district courts did not err

by quashing t he writs of attachment and

execution. By applying for a payment under

the VTVPA, the Hegnas agreed, on receipt of

a partial payment, to relin quish the right to

execute against Iranian property “at issue”

before bodies such as the Iran-United States

Claims Tribunal. The Lubbo ck property fits

that descript io n. Additionally, although

Congress gave families of terror vict ims

greater rights to sat isfy their judgments, it

expressly exempted consular property such as

that located in Houston.

Based on the regime that Congress has enacted and that the Executive has implemented, the Hegnas cannot satisfy their otherwise

proper and valid judgment and cannot collect

against the property involved in t his case. If

some injustice exists, tho se t wo bodies have

the responsibility to correct it.

The judgments at issue are AFFIRMED.

36 If, in ac cor dance with the Hegnas’ theory,

the United States risks exposing consular property

to attachment and sale whenever it uses any rental

proceeds to pay a judgment pursuant to the

VT VPA, it may merely choose not to use any

rental proceeds to satisfy an y judgments against

terrorist states. The government would still use the

property for a diplomatic or consular purpose, but

families seeking recovery under the VTVPA would

have fewer sources of proceeds with which to

satisfy their judgments.