1 12-1264 (L) Hausler et al., v. JPMorgan Chase Bank, N.A., et al. 

### UNITED STATES COURT OF APPEALS F OR THE 

### S ECOND 

### C IRCUIT

_____________________ A UGUST T ERM , 2012 (A RGUED : F EBRUARY 11, 2013 D ECIDED : O CTOBER 27, 2014) Docket Nos. 12-1264 (Lead), 12-1272 (C on), 12-1384 (Con), 12-1386 (Con), 13-1463 (Con), 12-1466 (Con), 12-1945 (Con)

_____________________ JEANNETTE FULLER HAUSLER , as Successor Personal Repres entative of THE ESTATE OF ROBERT OTIS FULLER, Deceased, on beha lf of THOMAS CASKEY as Personal Representative of THE ESTATE OF LYNITA FULLER CASKEY surviving daughter of ROBERT OTIS FULLER, a nd JEANNETTE HAUSLER, Plaintiff - Third-Party Defendants - Appellees , ESTATE OF ROBERT OTIS FULLER, FRED ERICK FULLER, GRACE LUTES, IRENE MOSS, and FRANCES FULLER, Plaintiffs - Third-Party Defendants ,

v. JP MORGAN CHASE BANK, N.A., CITIBA NK, N.A., ROYAL BANK OF SCOTLAND N.V., FKA ABN AMRO BANK N.V., BANK OF AMERICA CORPORATION, UBS AG, and BANK OF AMERICA N.A., Defendants - Garnishees - Third- Party Plaintiffs - Appellees , DRESDNER LATEINAMERIKA AG, FKA DRESDNER BANK LATEINAMERIKA AG, ABBOTT LABORATORIES, INC., PETROLEO S DE VENEZUELA, S.A., FUNDACION BENFICA NICOLAS S. ACEA, PABLO ALCAZA R, as trustee of FUNDACION BENEFICA NICOLAS S. ACEA, MAYRA BUSTAMENTS, a nd RENE SILVA, JR., as trustee of FUNDACION BENEFICA NICOLAS S. ACEA, Third-Party Defendants , REPUBLIC OF CUBA, FIDEL CASTRO RUZ, Indi vidually, As First Vice President of the Council of State and Council of Mi nisters and Head of the Cuba n Revolutionary Armed Forces, Cuban Revolutionary Armed Forces , El Ministerio Del Interior,2 Defendants – Third-Party Defendants ,

v. LTU LUFTTRANSPORTUNTERNE HMEN, LTU GMBH IN CARE OF KIRSTEIN & YOUNG PLLC 1750 K STREET NW, SUI TE 200 WASHINGTON, DC 20006, Consolidated - Third-Party Defendant - Appellant , BANCO BILBAO VIZCAYA ARGENTARIA , S.A., BANCO BILBAO VIZCAYA ARGENTARIA PANAMA, S.A., Claimants - Appellants , ESTUDIOS MERCADOS Y SUMINISTROS, S.L ., PHILIPS MEXICANA S.A. DE C.V., NOVAFIN FINANCIERE, S.A., Respondents - Appellants , CAJA DE AHORROS Y MONTE DE PIE DAD DE MADRID, PREMUDA S.P.A., Interpleaders - Appellants , SHANGHAI PUDONG DEVELOPMENT BANK CO. LTD. Third-Party Defendant - Appellant , AEROFLOT RUSSIAN AIRLINES, ADR Provider - Appellant , BANCO SANTANDER S.A., CAJA MADRID , BANCO ESPANOL DE CREDITO, BANCO SANTANDER TOTTA, S.A., UNION BANCAIRE PRIVEE, BANCO CENTRAL DE VENEZUELA, and BANCO DE DESARR OLLO ECONOMICO Y SOCIAL DE VENEZUELA, Respondents , SAN PAOLO BANK S.A. and ING BANK N.V.,

Claimants

. 

Before: H ALL , L YNCH , AND C ARNEY , Circuit Judges.

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 The Clerk of Court is respectfully directed to amend the caption to conform to that above.3 At issue in this case is whether § 201 of the Terrorism Risk Insurance Act of 2002 permits attachment of blocked electronic funds tran sfers. Because none of the transfers in this case were sent directly from the terrorist party or its agents or instrumentalities to the blocking bank, the judgment of the United States District Court for the Southern District of New York permitting attachment (Marrero, J .) is hereby REVERSED.

_______________________ D AVID A LAN B ARON , J AMES W ILSON P ERKINS , R OBERT P HILLIP C HARROW , and L AURA M ETCOFF K LAUS , Greenberg Traurig, LLP, Washington, D.C. forJeannette Hausler, Estate of Robert Otis Fuller, Frederick Fuller, Grace Lutes, Irene Moss, and Frances Fuller

J UANCARLOS S ANCHEZ , E SQ

. AND W ILFREDO A. R ODRIGUEZ , Avila Rodriguez Hernandez Mena & Ferri LLP, Coral Gables, Florida for Banco Santander, S.A., Caja Madrid, Caja de Ahorros y Monte do Piedad de Madrid, and Caja Madrid

B ERNARD J AMES G ARBUTT , III, Morgan, Lewis & Bockius LLP, New York, New York for Banco Espanol De Credito, Banco Santander Totta, S.A., Union Bancaire Privee, Banco Central de Venezuela, Banco de Desarrollo Economico y Social de Venezuela, Estudios Mercados y Suministros, S.L., and Philips Mexicana S.A. de C.V.

M ATTHEW B ELZ , K ENNETH C ARUSO , AND G LENN M. K URTZ , White & Case LLP, New York, New York for Banco Bilbao Vizcaya Argentina Panama, S.A., Banco Bilbao Vizcaya Argentaria, S.A., and Shanghai Pudong Development Bank Co. Ltd.

J AMES L. K ERR AND K AREN E. W AGNER , Davis Polk & Wardwell LLP, New York, New York for San Paolo Bank, S.A., ING Bank, N.V., JPMorgan Chase Bank, N.A., Citibank, N.A., The Royal Bank4 of Scotland N.V., Bank of America, Corp., UBS AG, and Bank of America N.A.

D AVID M ICHAEL K IRSTEIN , Kirstein & Young PLLC, Washington, DC, for LTU LuftransportUnternehmen, LTU Gmbh In Care of Kirstein & Young PLLC

C LAURISSE C AMPANALE -O ROZCO , Tisdale Law Offices, LLC, New York, New York for Premuda S.p.A.

D AVID S. J ONES , United States Attorney’s Office for the Southern District of New York, Ne w York, New York, for the United States of America

.

_______________________ Per Curiam: Before us on appeal is a matter of first im pression regarding th e interpretation of § 201 of the Terrorism Risk Insurance Act of 2002 (codified at 28 U.S.C. § 1610 note) (“TRIA”). The plaintiffs-appellees (collectively “Hausler”) are family members or trustees of

the estates of victims of state-sponsored terrorism. They s eek to enforce their 2009 Florida state court judgment (“the underlying judgment”) obtained against, among others, the Republic of Cuba (“Cuba”) by attaching the blocked assets of that state pursuant to TRIA § 201. Specifically, Hausler seeks to satisfy the unde rlying judgment from electronic fund transfers (“EFTs”) blocked pursuant to the Cuban Asse ts Control Regulations, 31 C.F.R. Part 515. 1 The defendant-garnishee banks at which the EFTs are stopped pursuant to the block oppose turning over the value of the EFTs. The dispositive questions are whether and under what factual circumstances TRIA permits the attachment of mid-stream EFTs.

1 For a detailed explanation of how EFTs function, see Shipping Corp. of India Ltd.v. Jaldhi Overseas Pte Ltd ., 585 F.3d 58, 60 n.1 (2d Cir. 2009).5 BACKGROUND A. Underlying Judgment The appellees are family members and esta te representatives of Bobby Fuller, an

American citizen who was arrested and execu ted by Cuban government forces on October 16, 1960. In 2005, the Hausler plaintiffs sued Cuba and others under the Foreign Sovereign Immunities Act, 28 U.S.C. § 1602 et seq ., in the Eleventh Judicial District, Miami-Dade County, Florida. Cuba did not appear and after conducti ng a hearing, the Florida state court awarded the Hausler plaintiffs $400,000,000 in combined compensatory and punitive damages. Cuba did not appeal this judgment. The judgment remains unsatisfied. Since March 1, 1982, Cuba has been continuous ly designated as a state sponsor of terrorism under section 6(j) of the Export Ad ministration Act of 1979 by the United States Department of State.

B. Judgment Collection and Proceedin gs Before the District Court To enforce the judgment, Hausler sought in th e Florida state courts writs of garnishment on United States companies which, according to Haus ler, were indebted to Cuba. The garnishees removed the garnishment proceedings to the Un ited States District Court for the Southern District of Florida, arguing that federal s ubject matter juri sdiction existed under 28 U.S.C. §§ 1330, 1332, and TRIA. In a parallel action, Hausler sought a full faith and credit determination for the underlying state judgment in the United States District Cour t for the Southern Distri ct of Florida. That request was granted on August 20, 2008. The judgment was then registered in the United States

District Court for the Southern District of New York, and Hausler commenced additional collection proceedings in that court. The Fl orida garnishment actions were (1) ultimately

transferred to the Southern Distri ct of New York and consolidated with the actions there or (2)6 dismissed without prejudice to be pursued in the Southern Distri ct of New York along with the

transferred and consolidated actions. On July 6, 2010, Hausler filed three petitions (hereinafter petitions I, II, and III) under Fed. R. Civ. P. 69 and N.Y. C.P.L.R. § 5225(b) against the defendant-garnishee banks to turn

over the value of the EFTs at issue in this case . The garnishee banks moved to dismiss turnover petition III, arguing, among other th ings, that Cuba had no property interest in the EFTs. The

district court denied the moti on, holding that TRIA preempted st ate law with respect to which entities had a property interest in mid-stream EFTs and that Cuba had a sufficient property

interest in the EFTs for Hausler to execu te upon them. The banks then commenced an interpleader action regarding Pe titions I and III. Numerous adverse claimant respondents appeared (collectively “the ACRs”), each claimi ng to have an interest in the blocked EFTs superior to Hausler’s. Hausler then moved for judgment on the pl eadings or, in th e alternative, summary judgment regarding Petitions I and III. The garnishee banks and ACRs cross-moved for summary judgment. The district court gran ted summary judgment in favor of Hausler for essentially the same reasons given in its earlier decision. 2 This appeal followed. DISCUSSION On appeal the garnishee-banks and ACRs argue that the blocked EFTs are not attachable “assets of” Cuba under TRIA § 201. We review de novo the “threshold issue of whether EFTs are . . . property” of a particular party. Calderon-Cardona v. JPMorgan Chase Bank, N.A. , No. 12-0075, slip op. at 12 (2d Cir. Oct. 23, 2014) (quoting Shipping Corp. of I ndia Ltd. v. Jaldhi Overseas Pte Ltd., 585 F.3d 58, 66–67 (2d Cir. 2009)).

2 Judge Marrero also ruled on the prior ity of claims between the ACRs and Haus ler. However, because this case can be resolved on the basis of whether the funds can be atta ched under TRIA at all, we do not reach those issues.7 In the ordinary case, a foreign state will be “i mmune from the jurisdiction of the courts of the United States and of the States” pursuant to the Foreign Sovereign Immunities Act (“FSIA”). 28 U.S.C. § 1604 (1988). Congress, however, has created terrorism-related exceptions to immunity under FSIA. See Calderon-Cardona , slip op. at 7. One such exception is TRIA’s

authorization of the attachment of the property of terrorist parties and that of their agencies or instrumentalities to satisfy certain judgments issued against them. See TRIA § 201(a). In particular, TRIA provides that: Notwithstanding any other provision of law, a nd except as provided in subsection (b), in every case in which a person has obtained a j udgment against a terrorist party on a claim based on an act of terrorism, or for which a terrorist party is not immune under [28 U.S.C. § 1605(a)(7)], the blocked assets of that terrorist party (including the blocked assets of any agency or instrumentality of that terrorist party) shall be subject to execution or attachment in the aid of execution in order to satisfy such judgment to the extent of any compensatory damages for wh ich such terrorist party has been adjudged liable. TRIA § 201(a) (emphasis supplied). “[W]hether or not midstream EFTs may be attached or seized depends upon the nature and wording of the statute pursuant to wh ich attachment and seizure is sought.” Export-Import Bank of U.S. v. Asia Pulp & Paper Co. , 609 F.3d 111, 116 (2d Cir. 2010). As with FSIA § 1610(g), Congress did not define the “type of pr operty interests that may be subject to attachment under” TRIA § 201(a). Calderon-Cardona , slip op. at 12 (interpreting FSIA § 1610(g)). While the Cuban Assets Control Re gulations, for purposes of those regulations,

include a non-exhaustive list of types of property that may be attached, 31 C.F.R. § 515.311(a), EFTs involving a Cuban bank are not among the t ypes of property identified. When Congress leaves a gap in a statute that “has not created any new propert y rights, but ‘merely attaches consequences, federally defined, to rights created under state law,’ we must look to state law to define the ‘rights the judgment de btor has in the property the [c reditor] seeks to reach.’”8 Calderon-Cardona , slip op. at 12–13 (quoting Asia Pulp , 609 F.3d at 117). Here, the banks at which the EFTs are blocked are in New York, so we look to New York property law to fill the

gap. We recently explained in Calderon-Cardona “that under New York law ‘EFTs are neither the property of the originator nor the be neficiary while briefly in the possession of an intermediary bank.’” Id . at 13 (quoting Jaldhi , 585 F.3d at 71). As suc h, “the only entity with a property interest in the stopped EFT is the enti ty that passed the EFT on to the bank where it presently rests.” Id . at 14. Thus, in order for an EFT to be a “blocked asset of” Cuba under TRIA § 201(a), either Cuba “itself or an agency or instrumentality thereo f (such as a state-owned financial institution) [must have] transmitted the EF T directly to the bank where the EFT is held pursuant to the block.” Id.

Unlike in Calderon-Cardona , where a remand was necessary to determine whether the EFTs at issue were attachable, it is undisput ed that no Cuban entity transmitted any of the blocked EFTs in this case directly to the blocki ng bank. As a result, neither Cuba nor its agents or instrumentalities have any pr operty interest in the EFTs that are blocked at the garnishee banks. Because no terrorist party or agency or instrumentality thereof has a property interest in the EFTs, they are not attach able under TRIA § 201. CONCLUSION We have reviewed the parties’ additional arguments and find them unavailing. In light of the foregoing analysis, the judgment of the Di strict Court is REVERS ED, and the case is REMANDED for further proceedings c onsistent with this opinion.