Court Opinion

ID: 2744526
Source: CourtListenerOpinion
Date Created: 2014-10-22 15:02:38.85117+00
Date Added: 2024-06-11T09:53:27.769278
License: Public Domain

13-3948-cv
     In re 650 Fifth Avenue and Related Properties

                          UNITED STATES COURT OF APPEALS
                              FOR THE SECOND CIRCUIT

                                     SUMMARY ORDER
     RULINGS BY SUMMARY ORDER DO NOT HAVE PRECEDENTIAL EFFECT. CITATION TO A SUMMARY ORDER FILED
     ON OR AFTER JANUARY 1, 2007, IS PERMITTED AND IS GOVERNED BY FEDERAL RULE OF APPELLATE
     PROCEDURE 32.1 AND THIS COURT’S LOCAL RULE 32.1.1. WHEN CITING A SUMMARY ORDER IN A
     DOCUMENT FILED WITH THIS COURT, A PARTY MUST CITE EITHER THE FEDERAL APPENDIX OR AN
     ELECTRONIC DATABASE (WITH THE NOTATION “SUMMARY ORDER”). A PARTY CITING A SUMMARY ORDER MUST
     SERVE A COPY OF IT ON ANY PARTY NOT REPRESENTED BY COUNSEL.

 1            At a stated term of the United States Court of Appeals
 2       for the Second Circuit, held at the Thurgood Marshall United
 3       States Courthouse, 40 Foley Square, in the City of New York,
 4       on the 22nd day of October, two thousand fourteen.
 5
 6       PRESENT: DENNIS JACOBS,
 7                ROBERT D. SACK,
 8                CHRISTOPHER F. DRONEY,
 9                              Circuit Judges.
10
11       - - - - - - - - - - - - - - - - - - - -X
12
13       In re 650 FIFTH AVENUE and RELATED
14       PROPERTIES
15
16       - - - - - - - - - - - - - - - - - - - -X
17
18       UNITED STATES OF AMERICA,
19                Plaintiff-Appellee,
20
21       STEVEN M. GREENBAUM, et al.,
22                Claimants-Appellees,
23
24                    -v.-                                               13-3948-cv
25
26       SOHRAB VAHABZADEH, et al.,
27                Claimants-Appellants.
28       - - - - - - - - - - - - - - - - - - - -X

                                                  1
 1
 2   FOR CLAIMANTS-APPELLANTS:   IRA STEPHEN SACKS, M. DARREN
 3                               TRAUB, and KIMBERLY J.
 4                               LINKLETTER, Akerman LLP, New
 5                               York, New York.
 6
 7   FOR PLAINTIFF-APPELLEE:     MICHAEL D. LOCKHARD, MARTIN S.
 8                               BELL, and BRIAN A. JACOBS, for
 9                               Preet Bharara, United States
10                               Attorney for the Southern
11                               District of New York, New York,
12                               New York.
13
14   FOR CLAIMANTS-APPELLEES:    CURTIS C. MECHLING, JAMES L.
15                               BERNARD, BENJAMIN WEATHERS-
16                               LOWIN, and MONICA HANNA, Stroock
17                               & Stroock & Lavan LLP, New York,
18                               New York.
19
20        Appeal from a judgment of the United States District
21   Court for the Southern District of New York (Forrest, J.).1
22
23        UPON DUE CONSIDERATION, IT IS HEREBY ORDERED, ADJUDGED
24   AND DECREED that the judgment of the district court be
25   AFFIRMED.
26
27        Claimants-appellants Sohrab Vahabzadeh, the Djhanbani
28   Family Members, the Khosrowshahi Family Members, and the
29   Khoshkish Family Members appeal from the judgment of the
30   United States District Court for the Southern District of
31   New York (Forrest, J.), dismissing their claims for lack of
32   Article III standing. We assume the parties’ familiarity
33   with the underlying facts, the procedural history, and the
34   issues presented for review.
35
36        This appeal arises out of a civil forfeiture proceeding
37   brought by the United States government (the “Government”)
38   against the right, title, and interest of Assa Corporation,
39   Assa Company Limited, Alavi Foundation, and 650 Fifth Avenue
40   Company in the building located at 650 Fifth Avenue, New
41   York, New York, and various related assets and properties
42   (collectively, the “Defendant Properties”). The Appellants

         1
              The above caption has been shortened in the
     interest of conserving space. The full caption is available
     on the cover of the parties’ joint appendix.
                                  2
 1   filed notices of claim to the Defendant Properties premised
 2   on allegations that their properties in Iran were unlawfully
 3   seized by the Iranian government during the 1979 Iranian
 4   Revolution, “commingled,” and used to commit the acts
 5   alleged in the Government’s forfeiture complaint.
 6
 7        For Article III standing, a party must have “suffered
 8   an injury in fact . . . [that is] fairly trace[able] to the
 9   challenged action of the defendant, and . . . [that] will be
10   redressed by a favorable decision.” Lujan v. Defenders of
11   Wildlife, 504 U.S. 555, 560-61 (1992) (citations and
12   internal quotation marks omitted). “In determining standing
13   to challenge a forfeiture, we look to ownership and
14   possession because they are often reliable indicators of
15   injury that occurs when property is seized.” United States
16   v. Cambio Exacto, S.A., 166 F.3d 522, 527 (2d Cir. 1999).
17   However, “we have been careful to acknowledge that while
18   ownership and possession generally may provide evidence of
19   standing, it is the injury to the party seeking standing
20   that remains the ultimate focus.” Id. A claimant that is
21   neither an owner nor a possessor of the property may
22   nevertheless suffer “a distinct and palpable injury” from
23   the forfeiture if it has a “financial stake” in the property
24   to be forfeited. Id. at 527-28 (citation and internal
25   quotation marks omitted). However, a party that holds no
26   more than a claim against the owner or possessor lacks
27   standing to challenge a property forfeiture. Id. at 528-29.
28   Such a party’s remedy is limited to suit against the owner
29   or possessor. Id.
30
31        The principles articulated in Cambio Exacto squarely
32   support the district court’s finding that the Appellants
33   lack Article III standing. They have articulated no reason
34   why the seizure of their properties in Iran would lead to
35   their obtaining a property interest in the Defendant
36   Properties.2 At most, the Appellants have a claim against

         2
              The Appellants fault the district court for
     failing to take as true their allegations that the Iranian
     government “commingled” the properties seized in Iran and
     used those properties to “maintain” the Defendant
     Properties. This criticism misses the mark. The district
     court’s decision was based on the Appellants’ failure to
     articulate any legal theory of “how they have any interest
     in the [Defendant] Properties” as a result of the alleged
                                  3
 1   the Iranian government for illegally seizing their
 2   properties in Iran.3 As Cambio Exacto makes clear, that is
 3   not enough to confer Article III standing to challenge
 4   forfeiture.
 5
 6        The Appellants argue that the facts they have alleged
 7   support the existence of a “constructive trust” under New
 8   York law. They are mistaken. As we explained in Torres v.
 9   $36,256.80 U.S. Currency, 25 F.3d 1154, 1158 (2d Cir. 1994):
10
11       A constructive trust arises under New York State law
12       when one person in a confidential relationship with
13       another transfers property in reliance on the
14       transferee’s promise to reconvey the property; if
15       the promise is breached and unjust enrichment
16       results, a constructive trust is imposed on the
17       property in the transferor’s favor.
18
19   Although a failure to satisfy each of these four factors
20   does not bar the imposition of a constructive trust, see
21   Simonds v. Simonds, 380 N.E.2d 189, 194 (N.Y. 1978), it does
22   counsel against it. The Appellants’ affirmative allegation
23   that the Iranian government unlawfully seized property
24   forecloses a claim that the Appellants “transfer[red]
25   property [to the Iranian government] in reliance on the
26   transferee’s promise to reconvey the property.” Absent a
27   promise to reconvey, there could not have been a breach.
28   The Appellants also fail to allege the existence of a
29   confidential relationship. Finally, as the district court
30   pointed out, even if the Appellants could allege the
31   existence of a constructive trust, that trust would be

     commingling, not the district court’s refusal to posit that
     commingling in fact took place.
         3
              As a group of claimants-appellees (the “Greenbaum
     Claimants”) point out, it is doubtful that the Appellants
     could bring any such claims in United States courts. The
     Foreign Sovereign Immunities Act (“FSIA”), 28 U.S.C. § 1602
     et seq., strips United States courts of jurisdiction to
     adjudicate claims against foreign sovereigns unless a
     statutory exception applies. A claim that the Iranian
     government unlawfully expropriated property of its own
     nationals does not appear to fall under any of those
     exceptions.
                                  4
 1   imposed only on the properties seized in Iran, not on the
 2   Defendant Properties.
 3
 4        The Appellants further argue that the district court
 5   abused its discretion by not giving them an opportunity to
 6   amend their complaint. “[A] motion for leave to amend a
 7   complaint may be denied when amendment would be futile.”
 8   Tocker v. Philip Morris Cos., Inc., 470 F.3d 481, 491 (2d
 9   Cir. 2006). The Appellants have articulated no additional
10   facts they could plead that would overcome the standing
11   defect identified by the district court. Accordingly, leave
12   to amend would be futile.
13
14        For the foregoing reasons, the judgment of the district
15   court is AFFIRMED.
16
17                              FOR THE COURT:
18                              CATHERINE O’HAGAN WOLFE, CLERK
19
20
21
22

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