Vera v. Banco Bilbao Vizcaya Argentaria, S.A.
Citation946 F.3d 120
Date Filed2019-12-30
Docket18-2345
Cited43 times
StatusPublished
Full Opinion (html_with_citations)
18â2345
Vera v. Banco Bilbao Vizcaya Argentaria, S.A.
In the
United States Court of Appeals
For the Second Circuit
______________
August Term, 2018
(Argued: January 29, 2019 Decided: December 30, 2019)
Docket No. 18â2345âcv
______________
ALDO VERA, JR., as Personal Representative of the Estate of ALDO VERA, SR.,
PlaintiffâAppellee,
WILLIAM O. FULLER, as Successor Personal Representative of the Estate of ROBERT OTIS
FULLER; GUSTAVO E. VILLOLDO, individually and as Administrator, Executor, and
Personal Representative of the Estate of GUSTAVO VILLOLDO; ALFREDO VILLOLDO,
PetitionersâAppellees,
âv.â
BANCO BILBAO VIZCAYA ARGENTARIA, S.A.,
RespondentâAppellant.
______________
B e f o r e:
CABRANES, LYNCH, and CARNEY, Circuit Judges.
______________
RespondentâAppellant Banco Bilbao Vizcaya Argentaria, S.A. (âBBVAâ) appeals
from an August 2, 2018 final judgment of the U.S. District Court for the Southern
District of New York (Hellerstein, J.) entered following issuance of our mandate in Vera
v. Banco Bilbao Vizcaya Argentaria, S.A., 729 Fed. Appâx 106 (2d Cir. 2018). As relevant
here, the District Courtâs judgment rendered final several of its previous orders
requiring BBVA to turn over funds to PetitionersâAppellees Jeannette Fuller Hausler,
Gustavo E. Villoldo, and Alfredo Villoldo from a blocked electronic fund transfer
originated by the Cuban ImportâExport Corporation, an instrumentality of the Republic
of Cuba. These turnover orders, in turn, rested on the District Courtâs grant of full faith
and credit to default judgments that PetitionersâAppellees secured against Cuba in
Florida state courts, whose jurisdiction against the sovereign was asserted under the
stateâsponsored terrorism exception of the Foreign Sovereign Immunities Act, 28 U.S.C.
§ 1605A (âFSIAâ). The District Court made no independent findings regarding its own
jurisdiction to enforce these judgments under the FSIA, and in particular under section
201(a) of the Terrorism Risk Insurance Act, 28 U.S.C. § 1610 note. Because our review of
the record convinces us that jurisdiction did not lie, we reverse the judgment of the
District Court, vacate the District Courtâs turnover orders, and remand the cause with
instructions to dismiss the action for lack of subjectâmatter jurisdiction. Applying
commonâlaw equitable principles of restitution, we further direct the District Court to
order PetitionersâAppellees, as well as PlaintiffâAppellee Aldo Vera, Jr., also a party in
these proceedings and a beneficiary of the same turnover orders, to return to BBVA the
funds that BBVA paid them under the void turnover orders.
REVERSED and REMANDED with instructions.
JUDGE CABRANES joins the judgment of the Court.
______________
ROARKE O. MAXWELL, (Andrew C. Hall, on the
brief), Hall, Lamb, Hall & Leto, P.A., Coral
Gables, FL, for PetitionersâAppellees Gustavo E.
Villoldo and Alfredo Villoldo.
JAMES W. PERKINS, (Ashley A. LeBlanc, on the
brief), Greenberg Traurig, LLP, New York, NY;
Roberto Martinez, Colson Hicks Edison, P.A.,
2
Coral Gables, FL, for PetitionerâAppellee Jeannette
Fuller Hausler.
Robert A. Swift, Kohn, Swift & Graf, P.C.,
Philadelphia, PA; Jeffrey E. Glen, Anderson
Kill P.C., New York, NY, for PlaintiffâAppellee
Aldo Vera, Jr.
KENNETH A. CARUSO, (Christopher D. Volpe,
Michelle LetourneauâBelock, on the brief),
White & Case LLP, New York, NY, for
RespondentâAppellant Banco Bilbao Vizcaya
Argentaria, S.A.
______________
CARNEY, Circuit Judge:
This is the fifth appeal that we have seen in these proceedings. The current
controversy arises from the efforts of PetitionersâAppellees Gustavo E. Villoldo and
Alfredo Villoldo (âthe Villoldosâ) and Jeannette Fuller Hausler (collectively, âthe
Villoldos and Hauslerâ or âPetitionersâ) to enforce several default judgments obtained
by them against the Cuban government in Florida state courts. These judgments rest,
factually, on allegations of torture and extrajudicial killing suffered by members of
Petitionersâ families in 1959 and 1960 at the hands of the revolutionary Cuban state.
They rest, legally, with respect to those courtsâ jurisdiction over Cuba, on the stateâ
sponsored terrorism exception of the Foreign Sovereign Immunities Act (âFSIAâ), now
codified at 28 U.S.C. § 1605A, and earlier found in substantially the same form at 28
U.S.C. § 1605(a)(7). Section 201(a) of the Terrorism Risk Insurance Act (âTRIAâ), codified at28 U.S.C. § 1610
note, would provide the District Court here a jurisdictional
3
basis for enforcing those state judgments, if valid, by attaching and executing on Cuban
assets blocked by banking institutions under the Cuban Assets Control Regulations, 31
C.F.R. Part 515.
Section 1605A revokes a stateâs sovereign immunity from legal proceedings and
liability for certain terrorismârelated claims for personal injury and death if, in addition
to meeting ordinary tort liability standards, âthe foreign state was designated as a state
sponsor of terrorism at the time [the tortious act] occurred, or was so designated as a
result of such act.â 28 U.S.C. § 1605A(a)(2)(A)(i)(I) (emphasis supplied). The Republic of
Cuba (âCubaâ) was designated as a state sponsor of terrorism only in March 1982âover
two decades after the abhorrent conduct that Petitioners allege. Accordingly, courts
may exercise jurisdiction over Petitionersâ claims against Cuba only if they can establish
that either (1) Cuba was designated as a state sponsor of terrorism in 1982 at least in
part because of the actions it took against their family members in 1959 and 1960, or (2)
Cuba committed certain acts of terrorism (within the statuteâs meaning) against
Petitioners or their family members after 1982.
Beginning in about 2007, PlaintiffâAppellee Aldo Vera, Jr. (âVeraâ), the Villoldos,
and Hausler (collectively, âAppelleesâ) independently pursued litigation on their tort
claims in Florida state courts, each obtaining a significant default judgment against
Cuba. (Hauslerâs judgment was for over $400 million, Veraâs, for $95 million, and the
Villoldosâ, for $2.79 billion.) In 2013, seeking enforcement of those judgments in New
York, they jointly filed an Omnibus Turnover Petition in the U.S. District Court for the
Southern District of New York against nineteen banks. Those banks, Appellees alleged,
held blocked Cuban assets in New York. One of the banks, RespondentâAppellant
Banco Bilbao Vizcaya Argentaria, S.A. (âBBVAâ), sought dismissal of the turnover
4
petition, contending first that the District Court lacked subjectâmatter jurisdiction over
the enforcement proceeding, and, then, in the alternative, that the Florida state court
judgments were void and not entitled to the federal courtâs full faith and credit.
The District Court denied BBVAâs motion to dismiss but did not make a
threshold jurisdictional determination in doing so, relying instead on the jurisdictional
findings and legal conclusions of the three Florida state courts to proceed under TRIA
section 201(a). As we held in reviewing (and vacating) a prior contempt order against
BBVA issued by the District Court with respect to Vera, reliance on a state courtâs legal
conclusions does not adequately support a federal courtâs own exercise of subjectâ
matter jurisdiction against a foreign sovereign or its assets when a proceeding is
predicated on a default judgment. In Vera v. Republic of Cuba, 867 F.3d 310, 318(2d Cir. 2017) (âVera IIIâ), we explained that the District Court was required to âanalyze the record independently to determine if Cuba was immuneâ from its jurisdiction and that the Florida courtsâ jurisdictional findings do not âbind or aidâ it in making this determination. See Verlinden B.V. v. Cent. Bank of Nigeria,461 U.S. 480
, 493â94 (1983) (âAt
the threshold of every action in a District Court against a foreign state . . . it must apply
the detailed federal law standards set forth in the Act.â). Accordingly, the District
Courtâs judgment against BBVA and the turnover orders that preceded it are subject to
serious challenge.
After carefully examining the record on appeal, we conclude that, had it
independently determined the issue, the District Court would necessarily have found
that Hausler and the Villoldos failed to establish that the exception to sovereign
immunity provided for in section 1605A applied. As we ruled with respect to Vera in
Vera III, Petitioners here have failed to show under section 1605A either that (1) Cuba
5
was designated as a state sponsor of terrorism âas a resultâ of the preâ1982 acts
underlying their judgments or that (2) the acts underlying their judgments occurred
after 1982. Without either showing, the stateâsponsored terrorism exception did not
permit the court to exercise jurisdiction over Cubaâs assets under TRIA section 201(a).
Accordingly, and as spelled out in greater detail below, we decide that the
District Court did not have subjectâmatter jurisdiction over this enforcement
proceeding. We therefore REVERSE the District Courtâs judgment; VACATE the District
Courtâs turnover orders; and REMAND the cause to the District Court with instructions
(1) to dismiss the amended Omnibus Turnover Petition and (2) to enter an order
directing restitution by Appellees of the funds that BBVA paid them.
BACKGROUND1
I. The start of the Vera proceedings
The proceedings that culminated in this appeal began in March 2012, when Vera,
who held a similar default judgment against Cuba issued by a Florida state court, filed
suit in the U.S. District Court for the Southern District of New York seeking to enforce
that judgment. Vera v. Republic of Cuba, No. 12âCVâ1596 (S.D.N.Y.). In August 2012, after
Cubaâs default in the federal proceeding, the District Court (Hellerstein, J.) determined
1 This statement of facts is drawn from the findings of fact made in the Florida state court
judgments secured by Hausler and the Villoldos. It also relies on documents supporting those
judgments that were presented to the District Court and to this Court by the parties in their
Joint Appendix. Although BBVA challenges the Florida state courtsâ jurisdictional
determinations, in this setting it has not disputed the reliability of their findings of fact.
Accordingly, because of Cubaâs default in the Florida state proceedings and because BBVA
raises no argument to the contrary, we accept these findings as true for present purposes.
6
that Veraâs Florida state court judgment was due full faith and credit and, accordingly,
entered a federal judgment in the amount of approximately $49 million in Veraâs favor.
Then, in late 2012 and early 2013, Vera filed numerous turnover motions, seeking to
seize assets from banks in New York that he alleged to be holding Cuban assets.
Vera was not long alone in seeking to enforce a default judgment against Cuba in
New York federal courts. In 2013, both Hausler and the Villoldosâthat is, Petitioners in
this caseâintervened in the Vera enforcement proceedings, asserting that their rights as
judgment creditors were entitled to priority over Veraâs. Before reviewing what
happened next in those proceedings, it will be helpful to describe the key facts
underlying the Villoldo and Hausler state court judgments and to provide a short
outline of their respective procedural histories.2
II. The Villoldo judgment
Gustavo E. Villoldo (âGustavoâ) and Alfredo Villoldo (âAlfredoâ) are the Cubanâ
born sons of the late Gustavo Villoldo Argilagos (âVilloldo Argilagosâ). Their father, a
dual citizen of the U.S. and Cuba, founded a successful automotive company and
owned numerous other businesses and landholdings in Cuba before the Cuban
Revolution. After the revolution brought the Castro government to power on January 1,
1959, the Villoldo family became a target of the new regime because of their financial
wealth and ties to the United States. Both sons are U.S. citizens.
2 None of the Florida state court judgments at issue in this appeal is, to our knowledge, reported
in Westlaw, LexisNexis, or other commercially available databases. Accordingly, we cite to the
judgments in the form provided by the parties in their Joint Appendix on appeal.
7
Cuban soldiers arrested Gustavo and Alfredo on January 6, 1959. Gustavo was
detained in unhealthy and inhumane conditions, beaten, and interrogated under torture
in a Cuban facility where executions were being carried out. After their release five days
later, the brothers and their father continued to be subject to severe harassment by the
Cuban government. Cuban soldiers repeatedly took Villoldo Argilagos into custody
and threatened to murder the entire family unless he turned over the familyâs
businesses and properties to the new regime. On February 16, 1959, one day after
meeting with prominent Cuban government member Ernesto âCheâ Guevara, Villoldo
Argilagos committed suicide. He did so, according to Gustavoâs testimony, because he
was ordered to do so to save the lives of his wife and sons. The two brothers then fled to
the United States, leaving behind their familyâs vast properties, which were soon after
confiscated.
After leaving Cuba, Gustavo Villoldo joined the Central Intelligence Agency, and
engaged in important intelligence activities on behalf of the United States. These
included the 1967 operation that led to Che Guevaraâs execution in Bolivia. In
deposition testimony, Gustavo Villoldo recounted that, shortly after the operation, two
Cuban agents were sent to New York to kidnap or kill him. He testified further in
general terms that, between 1997 and 2003, when he was living in the United States, the
Cuban government made numerous threats against his life.
In August 2011, in a Florida state court proceeding, the Villoldo brothers secured
a default judgment against Cuba for these wrongs. The court entered judgment in their
favor in the amount of $2.79 billion, denominating $1 billion of that sum as punitive
8
damages.3 The Florida state court characterized Cubaâs actions against the Villoldo
family as âtortureâ within the meaning of section 1605A of title 28 and ruled that, under
that section, it had subjectâmatter jurisdiction to hear their claims. In December 2011,
the Villoldos sued Cuba in the U.S. District Court for the Southern District of New York,
seeking recognition and enforcement of their Florida judgment under the Full Faith and
Credit Act, 28 U.S.C. § 1738. Villoldo v. Castro Ruz, No. 11âCVâ9394 (S.D.N.Y.) (Swain, J.).
In October 2012, according full faith and credit to the Florida judgment, Judge Swain
entered a default judgment against Cuba and related individuals and entities in that
case in the sum awarded by the Florida state court, making no independent
jurisdictional findings.
In November 2017, after their ongoing enforcement proceedings in the District
Court were nearly complete, the Villoldos (having returned to Florida state court) filed
a âmotion to reâestablish the court recordâ there with respect to the 2011 judgment.
They submitted new affidavits from Gustavo Villoldo, his daughter Elia Lora, and his
attorney Andrew C. Hall, and various attachments to those affidavits. Granting this
motion, the Florida state court then ruledâin November 2017âthat âthe information
contained within the affidavits and attachments were relied upon by the Court when
rendering its verdict at trial [in 2011] in this case.â J. Appâx 1027. Citing this newlyâ
submitted evidence, the Florida court issued an opinion and amended final judgment
3Earlier, in 2009, the Villoldos had obtained another Florida state court judgment in their favor
against Cuba in the amount of $1.179 billion, relying on largely similar allegations. J. Appâx 383â
89.
9
on June 4, 2018, making significant additional findings of fact and instructing that the
judgment was effective nunc pro tunc as of August 19, 2011.
In their 2017 affidavits, Gustavo Villoldo and Elia Lora represented that they had
earlier testified at trial that their home in Florida was once surrounded by armed men
whom they perceived to be agents of the Cuban state.4 Loraâs affidavit reflects that she
had observed four men with large guns in their hands, that her family members armed
themselves with two ARâ15 rifles and yelled at the intruders to leave, and that local
police responded to their 911 call within minutes but could not find the intruders.
Neither Alfredo nor Gustavo Villoldo was present in the home at the time. More
broadly, Gustavo Villoldo averred that he was subjected to a âconcerted and continuing
effortâ by Cuba following Che Guevaraâs death in 1967 âto locate [him] in order to carry
out [his] assassination.â J. Appâx 882.
III. The Hausler judgment
Jeannette Fuller Hausler (now deceased) was a U.S. citizen.5 Her brother, Robert
Otis Fuller, nicknamed âBobby,â was a dual U.S.âCuban national born in Cuba, and heir
to significant Cuban agricultural and business holdings. Mirroring the Villoldosâ
4This testimony was not reflected in the factual findings supporting the 2011 judgment and
does not appear to be in the contemporaneous 2011 deposition given by Gustavo Villoldo.
5Jeannette Hausler died during the pendency of this appeal and William Fuller, who succeeded
her as the administrator of Bobby Fullerâs estate, has been substituted as PetitionerâAppellee. In
this opinion, we continue to refer to Hausler as Petitioner and to the âHausler Judgment,â to
avoid confusion and ensure continuity with the language used in multiple rounds of
proceedings.
10
experience, the Fuller familyâs lives and properties were threatened by the new Cuban
regime after January 1959. In early October 1960, Cuban agents arrested Fuller, who
was returning from a short trip to Miami, and charged him with engaging in
counterrevolutionary activities. He was tortured until he signed a prepared confession.
Fuller was then presented to a military tribunal where, within minutes, he was
tried and sentenced to death. In the proceedings, he was denied access to meaningful
legal counsel and was not permitted to call witnesses in his defense. On October 16,
1960, he was executed by firing squad. His death prompted the U.S. Department of
State to file a formal protest denouncing the proceedings. In the protest, the Department
accused the Cuban authorities of carrying out Fullerâs trial in a âRoman [c]ircus
atmosphere,â failing to âobserve basic civilized standards,â and engaging in âinhuman
behavior.â J. Appâx 597â98.
In January 2007, in Florida state court, Hausler secured a default judgment
against Cuba for $400 million, of which $300 million was designated as punitive and
$100 million as compensatory damages. In an opinion accompanying the judgment, the
Florida state court ruled that Fuller was a victim of âextraâjudicial killingâ and asserted
jurisdiction over Cuba under the FSIAâs stateâsponsored terrorism exception, then
codified at 28 U.S.C. § 1605(a)(7).6 J. Appâx 592. The following year, on Hauslerâs 6From 1996 through 2008, the stateâsponsored terrorism exception to sovereign immunity was codified at28 U.S.C. § 1605
(a)(7). In 2008, section 1605(a)(7) was modified and then recodified as section 1605A. For purposes of the issues presented in this appeal, no relevant differences exist between current section 1605A and former section 1605(a)(7). See Schermerhorn v. State of Israel,876 F.3d 351, 357
(D.C. Cir. 2017) (observing that âsection 1605A(a) and its predecessor section
1605(a)(7) are nearly identicalâ in defining the scope of the terrorism exception). Even so, when
11
application, the U.S. District Court for the Southern District of Florida granted full faith
and credit to the state court judgment and entered a default judgment against Cuba,
making no independent jurisdictional findings. Hausler v. Republic of Cuba, No. 08âCVâ
20197 (S.D. Fla.) (Jordan, J.).
Hausler then began proceedings in the Southern District of New York. Hausler v.
Republic of Cuba, No. 09âCVâ10289 (S.D.N.Y.) (Marrero, J.). In 2009 and 2010, relying on
the Florida state and federal judgments, Hausler served writs of garnishment against
various New York banks holding blocked Cuban assets. She then formally intervened in
the Vera enforcement proceedings, now before us on appeal.
IV. The Vera enforcement proceedings
The proceedings leading to this appeal have been protracted and circuitous, to
say the least. As previewed in Section I, supra, Hausler and the Villoldos sought to use
their Florida state court judgments to seize Cuban assets held by banks operating in the
Southern District of New York. In 2013, both intervened in the Vera proceedings.
Between March and June of that year, the Villoldos opposed Veraâs turnover motions,
contending that Veraâs Florida state court judgment was void for lack of subjectâmatter
jurisdiction and asserting, inter alia, that Aldo Vera, Sr., the victim of Cubaâs acts, was
not a U.S. national and was not actually killed by agents of Cuba, but rather by criminal
discussing jurisdictional issues related to Hauslerâs judgment, we refer to section 1605(a)(7), the
provision in effect when it was entered.
12
elements operating in Puerto Rico.7 In May 2013, Hausler intervened, contending that
her rights as a judgment creditor preceded and therefore should take priority over those
of both Vera and the Villoldos.
After this initial period of competition, however, the three family groups reached
a dĂŠtente. They advised the District Court that they would jointly petition for turnover
of the relevant assets. In September 2013, they did so, filing the Omnibus Petition for
Turnover Order (âOmnibus Petitionâ) that we have mentioned and naming as
respondents BBVA and eighteen other banks which, they alleged, were holding blocked
Cuban assets.8
BBVA moved to dismiss the Omnibus Petition for lack of subjectâmatter
jurisdiction. The District Court denied the motion, construing BBVAâs motion as a
collateral attack on the Florida state court judgments, and not as a challenge to its own
jurisdiction. In rejecting BBVAâs arguments, the District Court commented that
â[BBVA] must concede that the Florida [courts] made appropriate jurisdictional
findings, and created a sufficient evidentiary record.â Vera v. Republic of Cuba, 40 F.
Supp. 3d 367, 376 (S.D.N.Y. 2014). The court further interpreted BBVAâs motion as an
improper challenge to the âmeritsâ of the Florida state courtsâ determinations in that it
attacked the Florida courtsâ findings (in the District Courtâs words) âthat Cuba was
7In a surprising twist, the Villoldo brothers further alleged that Vera, Sr., who in 1959 was the
Chief of the Department of Investigation of the Cuban police, supervised the officers who
tortured the brothers after they were arrested in Cuba.
8In February 2014, before the courtâs ruling, the Omnibus Petition was amended in ways not
relevant here. Our references to it encompass the amended version.
13
designated as a state sponsor of terrorism, at least partially, as a result of the acts
against Villoldo, Hausler, and Vera.â Id. This âmeritsâ argument was impermissible, in
the District Courtâs view, because the Florida courts âheld a trial in each of the three
cases, found the facts, and applied the law, finding that acts of terrorism took the lives
of plaintiffsâ family members [and] that Cuba was designated as a state sponsor of
terrorism either before these acts or partially as a result of these acts.â Id.9
Determining then that it had jurisdiction to proceed, the District Court entered
two orders important to the resolution of the appeal before us. In September 2014, the
court enforced a subpoena in which Vera sought information about BBVAâs holdings of
Cuban assets outside the United States. Then, in March 2015, the District Court ordered
that BBVA turn over the contents of a certain account to the U.S. Marshal. That account
9 Although they relied on slightly different analyses, all three Florida state courts had concluded
that they could exercise jurisdiction over Cuba under the stateâsponsored terrorism exception to
sovereign immunity. Hauslerâs state court judgment set forth the conclusion that âCuba, which
was designated as a state sponsor of terrorism in 1982 . . . at least in part by reason of the acts of
terrorism described herein including the torture and extraâjudicial killing of Bobby Fuller, is
subject to suit in any State Court of the United States, pursuant to the provisions in 28 U.S.C.
§ 1605.â J. Appâx 592. The Villoldosâ 2011 Florida state court judgment does not contain any language linking Cubaâs 1982 designation as a state sponsor of terrorism to its acts against the Villoldos, but appeared to conclude that the FSIA generally âgrants nationals of the United States a private right of action against a foreign state or officials or agents of that foreign state acting within the scope of his or her office, for damages for personal injury or death caused by acts of torture.âId.
at 402â03. Veraâs state court judgment, which is not directly challenged in this appeal but which we addressed and found wanting in Vera III, advised that âCuba, which was designated to be a state sponsor of terrorism in 1982 . . . is subject to suit in any State Court of the United States, pursuant to the provisions of28 U.S.C. § 1605
.â See Joint Appendix filed in
Vera v. Republic of Cuba, No. 16â1227 (2d Cir.) (âVera IIIâ), Dkt. No. 34, at 273 (providing copy of
the judgment).
14
contained $553,185.21, the proceeds of an electronic fund transfer (âEFTâ) that had been
initiated by the Cuban ImportâExport Corporation, a Cuban instrumentality.10 Vera v.
Republic of Cuba, 91 F. Supp. 3d 561, 573 (S.D.N.Y. 2015).
BBVA timely appealed both of these orders, but we were compelled to dismiss
its appeals for lack of jurisdiction because neither the order enforcing Veraâs subpoena
nor the turnover orders were âfinal decisionsâ of the District Court appealable under 28
U.S.C. § 1291. See Vera v. Republic of Cuba,802 F.3d 242, 246
(2d Cir. 2015) (âVera Iâ)
(subpoena enforcement order not appealable); Vera v. Republic of Cuba, 651 Fed. Appâx
22, 26 (2d Cir. 2016) (âVera IIâ) (turnover orders not appealable).
After our decision in Vera I, BBVA refused to produce any information in
response to the subpoena, and, upon the partiesâ stipulation to that effect, the District
Court held BBVA in contempt in April 2016. BBVA appealed the contempt order, this
time secure in its expectation of appellate jurisdiction. See In re Air Crash at Belle Harbor,
490 F.3d 99, 104(2d Cir. 2007) (contempt orders regarded as final and appealable). In May 2017, while its appeal from the contempt order was pending, the District Court denied BBVAâs motion for a further stay and ordered that the funds seized from BBVA 10The District Courtâs initial turnover order directed the U.S. Marshal to turn the funds over to Appellees within 15 business days of receiving the funds. BBVA unsuccessfully sought reconsideration of this order. In ruling on BBVAâs request, however, the District Court allowed BBVA to deposit the funds into the Registry of the U.S. Courts, rather than with the U.S. Marshal, if BBVA chose to seek a stay and file an interlocutory appeal. BBVA did so, and the deposit was thus made into the Registry. Vera v. Republic of Cuba, No. 12âCVâ1596 (AKH),2015 WL 13657629
, at *4 (S.D.N.Y. May 8, 2015).
15
be turned over to Appellees collectively.11 Vera v. Republic of Cuba, No. 12âCVâ1596
(AKH), 2017 WL 4350568, at *3 (S.D.N.Y. May 25, 2017).
In adjudicating BBVAâs appeal from the District Courtâs contempt order, we held
that the District Court lacked subjectâmatter jurisdiction over Veraâs enforcement action
against Cuba altogether; therefore, both the subpoena served by Vera on BBVA to
enforce his judgment and the subsequent contempt order were void. Vera v. Republic of
Cuba, 867 F.3d 310, 321 (2d Cir. 2017) (âVera IIIâ). Because Vera III concerned a discovery
dispute pertaining only to Vera, however, the question whether the District Court had
subjectâmatter jurisdiction to enforce the judgments held by Hausler and the Villoldos
was not before us. In line with our mandate in Vera III, the District Court vacated the
judgment it issued as to Vera, quashed Veraâs subpoena, and vacated the related
contempt order. It took no action with respect to Hausler and the Villoldos.
BBVA then appealed the District Courtâs May 2017 order directing that the funds
be disbursed jointly to the three cooperating sets of plaintiffs, and we once again
dismissed its appeal of the nonâfinal order for lack of appellate jurisdiction. Vera v.
Banco Bilbao Vizcaya Argentaria, S.A., 729 Fed. Appâx 106 (2d Cir. 2018) (âVera IVâ). This
time, however, we directed the District Court âto issue an appealable final judgment
expeditiouslyâ on remand so as to facilitate prompt review. Id. at 108.
In accordance with our mandate in Vera IV, the District Court entered final
judgment on August 2, 2018. BBVA timely appealed. Now, on this matterâs fifth trip to
11At that point, in accordance with the District Courtâs May 2015 order, the funds were secured
in the Registry of the U.S. Courts.
16
this Court,12 our appellate jurisdiction over the entirety of the dispute between BBVA,
on one hand, and Hausler, the Villoldos, and Vera, on the other, is undisputed.
DISCUSSION
To resolve this appeal, we must address several intertwined factual and legal
issues. We begin by reviewing the general principles of sovereign immunity as they
apply to terrorism claims brought against a foreign state. Following Vera III, we next
stress that, when a district court is presented with a default judgment against a foreign
sovereign, it must assure itself of its own power to hear the case without relying on the
jurisdictional findings and legal conclusions of the court that issued the judgment. Then
applying this framework to the case at hand, we consider whether Petitioners have
presented sufficient competent evidence that the 1982 designation of Cuba as a foreign
sponsor of terrorism was linked, even in part, to its acts against Hausler and the
12To recapitulate, this Courtâs previous rulings in the proceedings concerning BBVAâs resistance
to the enforcement efforts of Vera, Hausler, and the Villoldos, are:
1) Vera v. Republic of Cuba, 802 F.3d 242 (2d Cir. 2015) (âVera Iâ) (dismissing for lack of
appellate jurisdiction BBVAâs appeal of subpoena enforcement orders);
2) Vera v. Republic of Cuba, 651 Fed. Appâx 22 (2d Cir. 2016) (âVera IIâ) (dismissing for lack
of appellate jurisdiction BBVAâs appeal of turnover orders);
3) Vera v. Republic of Cuba, 867 F.3d 310 (2d Cir. 2017) (âVera IIIâ) (holding, on BBVAâs
appeal of a contempt order, that the District Court lacked subjectâmatter jurisdiction to
enforce Veraâs judgment);
4) Vera v. Banco Bilbao Vizcaya Argentaria, S.A., 729 Fed. Appâx 106 (2d Cir. 2018) (âVera IVâ)
(dismissing for lack of appellate jurisdiction BBVAâs appeal of the District Courtâs order
directing the Registry to disburse funds to Appellees but ordering the District Court to
enter final judgment expeditiously).
17
Villoldos, to support the District Courtâs exercise of jurisdiction over Cubaâs assets
under TRIA section 201(a).
After conducting a de novo review of the extensive record, we answer this
question in the negative. We therefore conclude that the District Court lacked
jurisdiction over Hausler and the Villoldosâ actions to enforce their judgments (just as it
lacked jurisdiction over Veraâs action, the key question resolved in Vera III). We finish
by considering whether in our discretion to order that Appellees make restitution of the
funds collected by them as a product of the District Courtâs jurisdictionally void orders.
We conclude that such an order of restitution is appropriate in the circumstances
presented here.
I. Subjectâmatter jurisdiction over these claims against Cuba
A. Principles of subjectâmatter jurisdiction under the Foreign Sovereign
Immunities Act
The Foreign Sovereign Immunities Act of 1976, Pub. L. 94â583, 90 Stat. 2891, governs the jurisdiction of courts in the United States over all private civil actions against foreign sovereigns.13 The FSIA provides the âsole basis for obtaining jurisdiction over a foreign state in our courts,â Argentine Republic v. Amerada Hess Shipping Corp.,488 U.S. 428, 434
(1989), and âmust be applied by the District Courts in every action against a foreign sovereign,â Verlinden B.V.,461 U.S. at 493
. See also Mobil Cerro Negro, Ltd. v. Bolivarian Republic of Venezuela,863 F.3d 96, 113
(2d Cir. 2017) (referring to â[t]he
13The FSIA is codified, as amended, in title 28 of the U.S. Code, in sections 1330, 1332(a), 1391(f),
1441(d), and 1602 through 1611. In the text, for convenience, we refer only to the section number
and presume codification in title 28, unless otherwise noted.
18
Supreme Courtâs emphatic and oftârepeated declaration in Amerada Hessâ and collecting
cases concerning the categorical nature of the FSIA). It codifies two types of foreign
sovereign immunityâimmunity from jurisdiction and immunity from attachment and
execution of the sovereignâs property. We start by briefly describing the latter, as it is
most directly at issue in this action to enforce Petitionersâ default judgments.
The FSIA provides that âthe property in the United States of a foreign state shall
be immune from attachment[,] arrest and execution except as provided in sections 1610
and 1611 of this chapter.â 28 U.S.C. § 1609. In this case, the District Court asserted
jurisdiction over the enforcement actions against Cuban assets under a modification to
the FSIA enacted by TRIA section 201(a).14 That statute grants courts subjectâmatter
jurisdiction over postâjudgment execution and attachment proceedings involving
blocked assets âin every case in which a person has obtained a judgment against a
terrorist party on a claim based upon an act of terrorism, or for which a terrorist party is
not immune under section 1605A or 1605(a)(7).â15
TRIA section 201(a) provides for federal court jurisdiction over execution and
attachment proceedings involving the assets of a foreign sovereign, however, only
where âa valid judgment has been enteredâ against the sovereign. Vera III, 867 F.3d at
14As we noted above, âTRIAâ refers to the Terrorism Risk Insurance Act of 2002, Pub. L. No.
107â297, 116 Stat. 2322, 2337, currently codified at28 U.S.C. § 1610
note.
15âBlocked assetsâ are defined in TRIA section 201(d)(2)(A) as âany asset seized or frozen by the
United States under section 5(b) of the Trading With the Enemy Act (50 U.S.C. App. 5(b)) or
under sections 202 and 203 of the International Emergency Economic Powers Act (50 U.S.C.
1701; 1702).â The Cuban assets at issue in this appeal were blocked under section 5(b) of the
Trading with the Enemy Act.
19
321 (internal quotation marks omitted) (emphasis in original)). In other words, section
201 âprovides jurisdiction for execution and attachment proceedings to satisfy a
judgment for which there was original jurisdiction under the FSIA . . . if certain
statutory elements are satisfied.â Weinstein v. Islamic Republic of Iran, 609 F.3d 43, 52 (2d
Cir. 2010). Whether the District Court here had jurisdiction under TRIA to attach and
execute on Cubaâs assets, therefore, turns on whether Petitioners held judgments that
were based on an exception to immunity from jurisdiction established by the FSIA.16
Accordingly, we now look at the FSIAâs framework for sovereign immunity from
jurisdiction.
The FSIA establishes that âa foreign state [is] immune from the jurisdiction of the
courts of the United States and of the States except as provided in sections 1605 to 1607
of this chapter.â 28 U.S.C. § 1604. If any of the listed exceptions applies, however, then a court may exercise jurisdiction over the state, see28 U.S.C. § 1330
(a), and the foreign 16Petitionersâ Omnibus Petition and certain of the District Courtâs orders also make reference to28 U.S.C. § 1610
(g), a provision enacted in 2008. Section 1610(g)(1) provides generally that âthe 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 . . . is subject to attachment in aid of execution, and execution, upon that judgment.â The Supreme Court has recently clarified, however, that section 1610(g) âdoes not provide a freestanding basis for parties holding a judgment under § 1605A to attach and execute against the property of a foreign state, where the immunity of the property is not otherwise rescinded under a separate provision within § 1610.â Rubin v. Islamic Republic of Iran,138 S. Ct. 816, 827
(2018). Accordingly, while section 1610(g)
defines the types of assets that might be subject to attachment and execution in terrorism cases
brought against foreign states, itâunlike TRIA section 201(a)âdoes not provide the District
Court an independent ground for jurisdiction.
20
state may be held liable, in state or federal court, âin the same manner and to the same
extent as a private individual under like circumstances.â Id. § 1606.
In this case, the only jurisdictional exception relied on by Petitioners is section
1605A, known as the âstateâsponsored terrorism exceptionâ or the âterrorism
exceptionâ from sovereign immunity. First enacted in 1996,17 this section currently
provides in relevant part:
A foreign state shall not be immune from the jurisdiction of courts of the
United States or of the States in any case not otherwise covered by this
chapter 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 for such an act if such act or provision of material
support or resources is engaged in by an official, employee, or agent of such
foreign state while acting within the scope of his or her office, employment,
or agency.
28 U.S.C. § 1605A(a)(1). By its terms, this provision applies to claims for personal injury
or death only if caused by one of several acts listed by statute: as relevant here,
extrajudicial killing or torture.
The exception is further cabined by two important preconditions set forth in
subsection (a)(2). First, a court may hear such a claim only if âthe foreign state was
designated as a state sponsor of terrorism at the time the act described in paragraph (1)
17The terrorism exception was first enacted as part of the Antiterrorism and Effective Death
Penalty Act of 1996 (âAEDPAâ), Pub. L. No. 104â132, 110 Stat. 1214. It was codified at28 U.S.C. § 1605
(a)(7) until 2008. As described supra n.6, for purposes of this appeal, current section 1605A and former section 1605(a)(7) may be treated as interchangeable. See Schermerhorn,876 F.3d at 357
.
21
occurred, or was so designated as a result of such act.â Id. § 1605A(a)(2)(A)(i)(I).18
Second, to maintain such a claim, either the claimant or the victim must be a U.S.
national, member of the U.S. armed forces, or employee or contractor of the U.S.
government at the time of the act giving rise to liability.19 Id. § 1605A(a)(2)(A)(ii).
Our Court has repeatedly held that both of these conditions must be satisfied for
the terrorism exception to apply. See Vera III, 867 F.3d at 317(âEven if a foreign state has engaged in one of the terrorist acts described above . . . it is not subject to suit in the United States unless the foreign state was designated as a state sponsor of terrorism [in accordance with the statute].â (internal quotation marks omitted)); In re Terrorist Attacks on Sept. 11, 2001,714 F.3d 109
, 115 n.7 (2d Cir. 2013) (âThe FSIAâs terrorism exception . .
. does not apply to [instrumentalities of a nonâdesignated state] because that exception
is only available against a nation that has been designated by the United States
government as a state sponsor of terrorism at the time of, or due to, a terrorist act.â).
Cuba never appeared in the Florida state court or the District Court here to
present a defense, jurisdictional or otherwise. Nevertheless, âthe FSIA, by its terms,
authorizes consideration of sovereign immunity from both jurisdiction and execution
18With respect to the designation requirement, section 1605A defines âstate sponsor of
terrorismâ as âa country the government of which the Secretary of State has determined, for
purposes of [several enumerated laws] or any other provision of law, is a government that has
repeatedly provided support for acts of international terrorism.â 28 U.S.C. § 1605A(h)(6).
19Section 1605A sets up a third precondition as well, requiring that, in cases where the listed act
took place on the territory of the defendant foreign state, the claimant afford that state âa
reasonable opportunity to arbitrateâ his or her claim. See 28 U.S.C. § 1605A(a)(2)(iii). This
precondition is not at issue here.
22
even in the absence of an appearance by the sovereign.â Walters v. Indus. & Commercial
Bank of China, Ltd., 651 F.3d 280, 293(2d Cir. 2011). The statute allows for courts to âconsider the [jurisdictional] issue once it is suggested by any partyâor for that matter, nonâparty.âId.
(emphasis in original). Indeed, even if no party raises the issue, courts have an obligation to consider subject matter jurisdiction sua sponte. Henderson ex rel. Henderson v. Shinseki,562 U.S. 428, 434
(2011). Accordingly, BBVA was entitled to raise
Cubaâs sovereign immunity from execution on its assets before the District Court as a
defense to Petitionersâ enforcement action; and it may, on appeal, challenge the District
Courtâs ruling that Cuba was not immune.20
B. Review and enforcement of default judgments in the FSIA context
In reviewing a default judgment, we generally âdeem[] all the wellâpleaded
allegations [as to liability] in the pleadings to be admitted.â Transatlantic Marine Claims
Agency, Inc. v. Ace Shipping Corp., 109 F.3d 105, 108(2d Cir. 1997). This principle does not preclude us, however, from undertaking âan inquiry into whether the default judgment itself is void for lack of subject matter jurisdiction.âId.
Pursuing such an inquiry, we review jurisdictional conclusions de novo, and in assessing âwhether there is a factual basis to support the [District Courtâs] exercise of subject matter jurisdiction . . . 20For this reason, we reject the Villoldosâ argument that that BBVA lacks standing to âcollaterally attackâ their Florida state court judgment. Villoldo Br. 23â26. First, we rejected this contention in Vera III, explaining that â[w]e need not consider a collateral attack on the Florida judgment [because] BBVAâs principal argument . . . is that the District Court lacked subjectâ matter jurisdiction.â867 F.3d at 320
n.9 (emphasis in original). Moreover, as described above, a district court may consider its jurisdiction when suggested by any party, âeven if there is no reason to confer a special right of âthirdâparty standingâ on that party.â Walters,651 F.3d at 293
.
23
we are not limited in our right to refer to any material in the record.â Velez v. Sanchez,
693 F.3d 308, 314 (2d Cir. 2012) (internal quotation marks omitted).
In these proceedings, Petitioners asked the District Court to enforce judgments
issued by several Florida state courts, each of which concluded that its jurisdiction over
Cuba was authorized by the stateâsponsored terrorism exception. These judgments did
not, however, bar the District Court from considering the jurisdictional question anew,
nor did they relieve it of its obligation to assure itself of its own jurisdiction, whether
upon BBVAâs motion or sua sponte.
It is generally true, of course, that âprinciples of res judicata apply to
jurisdictional determinationsâboth subject matter and personal.â Ins. Corp. of Ireland,
Ltd. v. Compagnie des Bauxites de Guinee, 456 U.S. 694, 702 n.9 (1982). At the same time, a finding of jurisdiction is preclusive only when the jurisdictional issues âhave been fully and fairly litigated . . . in the court which rendered the original judgment.â Durfee v. Duke,375 U.S. 106, 111
(1963). Here, as we decided in Vera III, Cubaâs failure to appear meant that, although the Florida courts heard relevant evidence, âthe jurisdictional facts necessary to eliminate Cubaâs sovereign immunity under the FSIA were not fully and fairly litigatedâ in the Florida actions.867 F.3d at 318
. The Florida state courtsâ jurisdictional conclusions could therefore âneither bind the District Court . . . nor . . . be relied on by the parties.â Id; see also Jerez v. Republic of Cuba,775 F.3d 419
, 422â23 (D.C.
Cir. 2014) (refusing to accord res judicata effect to similar Florida state default judgment
entered against Cuba).
Thus, to determine whether it had jurisdiction under TRIA section 201(a) to
attach or execute on Cubaâs assets, the District Court should have first determined for
24
itself whether the stateâsponsored terrorism exception to jurisdictional immunity
applied to the Florida state court default judgments. 21 See Vera III, 867 F.3d at 321(in absence of valid underlying judgment, âTRIA did not provide a proper basis for subject matter jurisdiction over subsequent proceedingsâ). In this case, however, the District Court simply granted full faith and credit to the Florida courtsâ jurisdictional conclusions rather than analyzing whether their determinations could support its application of the terrorism exception. See Vera, 40 F. Supp. 3d at 376â77. This deficiency 21Veraâs situation is different from that of Hausler and the Villoldos in one notable respect. Upon Cubaâs default in the federal proceeding in Vera in 2012, the District Court granted full faith and credit to Veraâs Florida state court judgment and entered a federal default judgment against Cuba. J. Appâx 304â05. The Villoldos and Hausler, in contrast, never requested that the District Court here enter a federal default judgment against Cuba on their judgments, likely because other federal courts had already done so. See J. Appâx 408â09 (Villoldo federal default judgment entered by Judge Swain of the Southern District of New York);id.
at 611â12 (Hausler
federal default judgment entered by Judge Jordan of the Southern District of Florida). Instead,
Hausler and the Villoldos requested only that the District Court here enforce their judgments
against Cuba under TRIA section 201(a). Therefore, while in Vera III we reviewed both the
District Courtâs entry of a default judgment and its later reliance on that judgment to support
enforcement jurisdiction under TRIA section 201(a), here we review the District Courtâs
jurisdiction over the enforcement proceedings only.
Under the circumstances presented now, though, the distinction has little practical
effect. As observed in the text, because Cuba defaulted, âthe jurisdictional facts necessary to
eliminate Cubaâs sovereign immunity were not fully and fairly litigatedâ in these prior federal
court proceedings. See Vera III, 867 F.3d at 318. Accordingly, when confronted with BBVAâs challenge, the District Court should have considered whether it was enforcing âjudgment[s] for which there was original jurisdiction under the FSIA,â Weinstein,609 F.3d at 52
, to assure itself
of its own jurisdiction under TRIA. This inquiry, in turn, would have required it to answer the
same question as was posed in Vera III: whether the factual findings of the underlying
judgments and any other evidence properly before it could support application of the stateâ
sponsored terrorism exception to Cuba.
25
calls into question the District Courtâs exercise of jurisdiction over the enforcement of
the judgments.
Ordinarily, we would address a District Courtâs failure to make appropriate
findings to support its jurisdiction by remanding for further proceedings. In Vera III,
however, we declined to do so because âthe case present[ed] no relevant unanswered
factual issues regarding the existence of subject matter jurisdiction.â 867 F.3d at 319 n.8.
We follow the same approach here and proceed to decide de novo whether the District
Court had subjectâmatter jurisdiction under the FSIA and TRIA section 201(a) over the
enforcement actions brought by Hausler and the Villoldos.22
22Seeking to avoid the de novo review established by Vera III, Petitioners contend that precedent
bars us from revisiting the question of subjectâmatter jurisdiction. We do not find their
arguments persuasive, for the following reasons.
First, the Villoldos argue that in Vera II and Vera IV, where we dismissed BBVAâs appeals
of the District Courtâs turnover orders for lack of appellate jurisdiction, we also decided the
issue of subjectâmatter jurisdiction sub silentio, insofar as BBVA had briefed the issue in both
appeals. Villoldo Br. 22â23. This contention is without merit: once we determined that we, the
Court of Appeals, lacked jurisdiction over the appeal, we had no occasion (or, indeed, arguably,
authority) to rule on a challenge to the District Courtâs jurisdiction over the case as a whole.
Second, Hausler contends that we decided that we had subjectâmatter jurisdiction to
enforce her judgment in an appeal from a collateral proceeding in Hausler v. JP Morgan Chase
Bank, N.A., 770 F.3d 208(2d Cir. 2014). She submits that this 2014 decision binds us now. Hausler Br. 31â36. Although BBVA had addressed the jurisdictional question in its appellate brief in that appeal, there, we ruled against Hausler on the merits, holding that she could not attach certain blocked EFTs because âneither Cuba nor its agents or instrumentalities ha[d] any property interest in the EFTs that are blocked in the garnishee banks.âId. at 212
. That case, however, was argued in tandem with CalderonâCardona v. Bank of N.Y. Mellon,770 F.3d 993
(2d
Cir. 2014), which definitively resolved the merits question at issue in Hausler: the nature of the
ownership interest necessary for a blocked EFT to be deemed the âpropertyâ of a foreign state.
26
C. The Villoldosâ and Hauslerâs claims and Cubaâs designation as a state
sponsor of terrorism
The Villoldosâ and Hauslerâs claims arise largely from acts that predated Cubaâs
1982 designation as a state sponsor of terrorism by over two decades. Accordingly, to
justify invoking those preâ1982 acts and the stateâsponsored terrorism exception to
sovereign immunity as the basis for this enforcement action, they must establish that
Cuba was so designated âas a result ofâ its acts against their families. See 28 U.S.C.
§ 1605A(a)(2)(A)(i)(I); see also id. § 1605(a)(7)(A) (2007); City of New York v. Permanent
Mission of India to the United Nations, 446 F.3d 365, 369(2d Cir. 2006) (âThe party seeking In CalderonâCardona, we dealt with attachment of property under section 1610(g), while in Hausler we addressed the analogous provision in TRIA section 201(a). But we resolved Hausler by applying CalderonâCardona, which had issued only several days prior. 770 F.3d at 211â12. As we have commented elsewhere in similar circumstances, â[i]t would be ironic if, in our desire to avoid rendering an advisory opinion, we were to address a novel [jurisdictional] question in a case where the result is foreordained by another decision of this Court.â Ctr. for Reprod. Law & Policy v. Bush,304 F.3d 183
, 195 (2d Cir. 2002).
Accordingly, because the outcome in Hausler was indisputably âforeordainedâ by our
decision in CalderonâCardona, the Hausler court sensibly avoided delving into the voluminous
record on appeal to ascertain the precise basis for the district courtâs assertion of jurisdiction in
that case. See Ivanishvili v. U.S. Depât of Justice, 433 F.3d 332, 338 n.2 (2d Cir. 2006) (explaining that âwhere the jurisdictional constraints are imposed by statute, not the Constitution, and where the jurisdictional issues are complex and the substance of the claim is . . . plainly without merit,â we may consider the merits of the case without first addressing statutory jurisdiction). The 2014 Hausler decision thus cannot reasonably be understood to have decided the jurisdictional issue. See Steel Co. v. Citizens for a Better Envât,523 U.S. 83, 98
(1998) (approving of
ruling where court âdeclined to decide [the] jurisdictional question, because the merits question
was decided in a companion case, with the consequence that the jurisdictional question could
have no effect on the outcomeâ) (internal citations omitted).
27
to establish jurisdiction [over a foreign state] bears the burden of producing evidence
establishing that a specific exception to immunity applies.â).
We have not yet had occasion to articulate how taut the causal link must be
between a specific enumerated actâsuch as an extrajudicial killing or act of tortureâ
and a countryâs later designation to support application of the terrorism exception. Here
too, we need not address whether Petitioners must meet the more demanding standard
of âbutâfor causationâ (i.e., that Cuba was designated a state sponsor of terrorism as a
direct result of the specific acts taken against their family members, and that it would
not otherwise have been so designated). Rather, as we did in Vera III, we examine the
record to ascertain if the Villoldos or Hausler adduced evidence that âspecifically linksâ
Cubaâs acts against their families to the Secretary of Stateâs determination in 1982 to
designate Cuba as a state sponsor of terrorism. 867 F.3d at 319. And again, as in Vera III,
we find the record patently insufficient, even under this lesser causation standard, to
support the Villoldosâ and Hauslerâs position.
During one of several collateral federal district court proceedings spawned by
this sprawling litigation, the State Department in 2012 filed a Statement of Interest
presenting its formal position as to the âreason or reasons Cuba was designated a state
sponsor of terrorism under Section 6(j) of the Export Administration Act of 1979.â23 J.
Appâx 323. The submission, which BBVA points to on appeal, consisted of an affidavit
23After BBVA moved in the U.S. District Court for the Southern District of Florida to vacate the
Hausler judgment for lack of subjectâmatter jurisdiction, the State Department made this filing
at the invitation of thenâDistrict Judge Adalberto Jordan. Hausler v. Republic of Cuba, No. 08âCVâ
20197 (S.D. Fla. Feb. 7, 2012), ECF No. 79.
28
by Peter M. Brennan, an experienced diplomat who was then in charge of the
Departmentâs Office of the Coordinator for Cuban Affairs. Brennan averred that, in
1982, when it was so designated, âCuba belonged in the category of states that have
repeatedly provided support for . . . organizations and groups abroad that used
terrorism and revolutionary violence as a policy instrument to undermine existing
governments.â Id. at 324. This support was the reason for its designation, he implied. In
support of this understanding, Brennanâs affidavit cited contemporaneous
Congressional testimony given by two State Department officials: (1) the March 12, 1982
testimony of Thomas Enders, Assistant Secretary of State for InterâAmerican Affairs,
before the Subcommittee on Security and Terrorism of the Senate Judiciary Committee;
and (2) the March 18, 1982 testimony of Ernest Johnson, Jr., Deputy Assistant Secretary
for Economic Affairs, before a subcommittee of the Senate Foreign Relations
Committee.24 We also referred to these documents in Vera III.
Enders, in his testimony before the Senate Subcommittee on Security and
Terrorism, provided an extensive catalogue of Cuban support given to insurgent
groups in other Latin American countries, including Nicaragua, El Salvador,
Guatemala, Honduras, Costa Rica, Colombia, and Chile. Enders specifically referenced
Cubaâs implementation in 1978 of a ânew strategy . . . of uniting the left in the countries
of the hemisphere for the purpose of using it . . . [to establish] more MarxistâLeninist
24See The Role of Cuba in Intâl Terrorism & Subversion: Hearing Before the Subcomm. on Sec. &
Terrorism of the S. Comm. on the Judiciary, 97th Cong. 142â48 (1982) (testimony of Thomas
Enders); Regulation Changes on Exports: Hearing Before the Subcomm. on Near E. & S. Asian Affairs
of the S. Comm. on Foreign Relations, 97th Cong. 9â10 (1982) (testimony of Ernest Johnson, Jr.).
29
regimes in this hemisphereâ as standing in contrast to the countryâs previous attempts
to âportray itself as a member of the international community not unlike others,
carrying out stateâtoâstate relations through embassies and emphasizing trade and
cultural contacts.â J. Appâx 332. Enders portrayed the members of the Cuban leadership
group as subject to a âdeepâseated drive to reâcreate their own guerrilla experience
elsewhere,â observing that âthe Castro regime has made a business of violent
revolution.â Id. at 336.
Johnsonâs brief testimony echoed Endersâs remarks. He again tied Cubaâs 1982
designation to its support of armed groups outside its borders. He expressed the âhope
[that] . . . the addition of Cuba [to the list] will demonstrate to other countries . . . that
our export controls are truly directed towards terrorism. . . . In the case of Cuba, we
evaluated carefully the evidence of Cuban support for revolutionary violence and
groups that use terrorism as a policy instrument.â Id. at 362.
Notably absent from Endersâs and Johnsonâs testimony is any reference to
political repression or human rights abuses within Cuba itself, either during the 1959â60
period, when Cuba tortured the Villoldos and their father and executed Bobby Fuller;
during the period immediately preceding Cubaâs 1982 designation as a state sponsor of
terrorism; or in any other time period. Instead, the underlying record supports
Brennanâs assertion that Cuba was designated as a result of its âsupport for
organizations and groups abroad that used terrorism and revolutionary violence as a
policy instrument.â J. Appâx at 324; see also Vera III, 867 F.3d at 318 (reaching same
conclusion). In the face of these official statements describing the Secretary of Stateâs
reasons in 1982 for designating Cuba as a state sponsor of terrorism, neither the
30
Villoldos nor Hausler present any persuasive evidence that Cuba was in fact so
designated âas a result ofâ its violent actions against their families decades prior.
The Villoldos
The Villoldos cite extensively the jurisdictional conclusions of the Florida state
court. Such conclusions, however, cannot be relied on by the parties to establish
jurisdiction in the District Court here. Vera III, 867 F.3d at 318. They also recount their
allegations of horrible mistreatment that they and their father suffered at the hands of
the Cuban revolutionary government in 1959, but provide no evidence that might
âspecifically linkâ these acts to the Secretary of Stateâs 1982 designation of Cuba as a
state sponsor of terrorism.
Looking to other acts to establish such a link, the Villoldos refer further to the
Florida state courtâs factual finding that âCuba stole [their familyâs] enormous wealth
and used it to fund the exportation of terrorism throughout Latin America, establishing
jurisdiction as to all three Villoldo plaintiffs.â Villoldo Br. 49. But, even assuming that
Cubaâs seizure of the Villoldosâ assets helped to support its later promotion of terrorism
overseas, the available record strongly suggests that Cuba was not designated a state
sponsor of terrorism as a result of any seizure of assets within its borders, regardless of
the use to which it later may have put some portion of those assets. Accordingly, the
Villoldos have failed to meet their burden to establish that the District Court had
jurisdiction over their action to enforce their Florida state judgment based on Cubaâs
acts of torture or property seizures committed in 1959.
31
Turning to more recent events, the Villoldos contend in the alternative that the
District Court here had jurisdiction to enforce their state court judgment because of
Cubaâs alleged repeated attempts to assassinate Gustavo Villoldo after its 1982
designation as a state sponsor of terrorism. These, they insist, constituted some of the
acts of âtortureâ on which the Florida state judgment was based.25 Villoldo Br. 49â52.
Their allegations, however, are legally insufficient.
The terrorism exception incorporates the definition of âtortureâ established in the
Torture Victim Protection Act of 1991 (âTVPAâ), Pub. L. No. 102â256, 106 Stat. 73. See 28 U.S.C. § 1605A(h)(7). The TVPA defines torture as âany act, directed against an individual in the offenderâs custody or physical control, by which severe pain or suffering . . . whether physical or mental, is intentionally inflicted on that individual for [certain enumerated purposes].â28 U.S.C. § 1350
note (emphasis added). See Chowdhury v. Worldtel Bangladesh Holding, Ltd.,746 F.3d 42, 52
(2d Cir. 2014) (torture is a âdeliberate and calculated act of an extremely cruel and inhuman nature specifically intended to inflict excruciating and agonizing physical or mental pain or sufferingâ) (citation omitted). The Villoldos urge, and the Florida state court reached the legal conclusion, that âthreats of assassination and assassination attemptsâ carried out against Gustavo Villoldo after 1982 âare properly classified as torture.â J. Appâx 865. After reviewing the record, we conclude that neither the Florida courtâs findings of fact nor any evidence 25We need not consider whether these alleged postâ1982 acts could support valid claims for âhostage takingâ or âthe provision of material support or resourcesâ within the meaning of 28 U.S.C. § 1605A. The Florida state court issued a judgment explicitly based on a finding of âtorture,â and as we have explained, the District Courtâs jurisdiction here is entirely dependent on its recognition of a valid state court judgment. Vera III,867 F.3d at 321
.
32
submitted by the Villoldosânor, indeed, the Villoldosâ general allegationsâsupport
this conclusion.26 Accordingly, the Villoldos failed to establish that Cuba committed
torture or any other act enumerated in section 1605A(a)(1) against either of them after
1982. The District Court therefore lacked jurisdiction over the Villoldosâ enforcement
action and should have dismissed their petition.27
26The specific postâ1982 acts that Gustavo alleges include: (1) that on six occasions armed
individuals âapproached [him] in an aggressive mannerâ; (2) that on one of these occasions, a
Cuban man approached him outside a restaurant in Miami, Florida, displayed a weapon, and
stated he would kill him; and (3) that âarmed assassins surrounded [his] familyâs home in
Miamiâ while he was driving to and from a nearby convenience store.â J. Appâx 883. While
disturbing, none of these incidents amount to âtortureâ within the meaning of the TVPA.
27 Because the District Court made its jurisdictional determination in 2014, it did not then have
before it the amended 2018 judgment that the Florida state court directed to be effective nunc
pro tunc as of the 2011 judgment or the additional materials submitted by the Villoldos in
support of their 2017 state court motion to âreâestablish the record.â The Villoldos did, however,
file both the 2018 judgment and the materials supporting their motion with the District Court in
New York, and in July 2018, requested that the court consider these materials âshould [it]
engage in further review of the Florida state courtâs subject matter jurisdiction.â J. Appâx 1044.
Although the District Court did not take up the Villoldosâ invitation and instead entered final
judgment in response to our mandate in Vera IV, 729 Fed. Appâx at 108, the newlyâfiled
materials are now part of the record on appeal.
In reaching our conclusion on this argument, we have reviewed the entirety of the
record, including the materials submitted by the Villoldos in 2017 and 2018. Because, after
having considered these materials, we conclude that the Villoldos have failed to establish that
the terrorism exception applies, a remand for the District Court to consider them in the first
instance is unnecessary.
33
Hausler
For her part, Hausler seeks to satisfy the preconditions to reliance on the
terrorism exception by pointing to testimony given by Peter Deutsch, a former
Congressman, and Jaime Suchlicki, a professor at the University of Miami and expert on
Cuban affairs.28 Deutsch testified in a 2003 deposition in unrelated proceedings that, as
a member of Congress, he was a cosponsor of the 1996 AEDPA amendment that
generated the terrorism exception. In that deposition, he stated his view that âin 1961
President Kennedy effectively and in fact . . . designated [Cuba] as a state sponsor of
terrorism.â J. Appâx 685. In a 2012 affidavit filed in related proceedings in the U.S.
District Court for the Southern District of Florida, Deutsch further declared that he
âagreed to be directly involved in the drafting and enactment as a coâsponsor of the
[FSIA terrorism exception] based upon assurances that my constituents who had
suffered from the Government of Cubaâs acts of extraâjudicial killing and torture during
the period of 1960â61 would, under this legislation, be able to obtain legal redress.â Id.
at 661. He emphasized that he âwould not have agreed to be a coâsponsor of that
legislation [had he] not received those assurances,â and that he âwas assured that the
language as drafted, and as later enacted, met this test.â Id. In 2012, Deutsch reiterated
his view that â[i]n 1961 President John F. Kennedy effectively and in fact designated the
28In the course of the proceedings before Judge Jordan in the U.S. District Court for the
Southern District of Florida, the attorney who initially litigated Hauslerâs claim before the
Florida state court filed an affidavit in which he both acknowledged that no transcript was
made of the default judgment proceeding and represented that the deposition testimony of
Congressman Deutsch and proffered testimony by Professor Suchlicki were admitted into the
state court record. Hausler v. Republic of Cuba, No. 08âCVâ20197 (S.D. Fla. Jan. 20, 2012), ECF No.
77. No further record appears to be available.
34
Government of Cuba a state sponsor of terrorism, in part by reason of the extraâjudicial
killing of U.S. citizens during the 1960â61 time period.â Id. at 662.
Professor Suchlicki supported Deutschâs assertions. He averred in a 2012
affidavit that the âhistorical evidence overwhelmingly demonstrates that the
Government of Cuba was condemned by the Kennedy administration starting no later
than early 1961, based at least in part upon the extrajudicial killing and torture of U.S.
citizens,â and that, as a professional in the field, he was ânot aware of any statement
which would support the view that support for Latin American revolutionaries was the
only reason for such designation of the Government of Cuba as a state sponsor of
terrorism.â Id. at 673.
The assessments offered in the statements of Deutsch and Suchlicki reflect a
misunderstanding of the statutory regime that governs sovereign immunity and its
âterrorism exception.â The version of FSIA in effect when Hausler obtained her
judgment abrogated the sovereign immunity of a foreign state designated under
âsection 6(j) of the Export Administration Act of 1979 (50 U.S.C. App. 2405(j)) or section
620A of the Foreign Assistance Act of 1961 (22 U.S.C. 2371).â 28 U.S.C. § 1605(a)(7)(A) (2007). Congress did not, however, add section 620A to the Foreign Assistance Act until June of 1976. Pub. L. No. 94â329, § 303,90 Stat. 729
(1976). Cuba could not therefore
have been so designated in 1961 as Deutsch and Suchlicki appear to claim.
Deutsch and Suchlicki, however, are not entirely incorrect. Section 620(a) of the
original Foreign Assistance Act of 1961 expressly prohibited the provision of foreign aid
to Cuba and authorized the President âto establish and maintain a total embargo upon
all trade between the United States and Cuba.â Pub. L. No. 87â195, § 620, 75 Stat. 424,
35
444â45 (1961). Moreover, President Kennedy in fact implemented such an embargo in
February 1962. Proclamation No. 3447, Embargo on All Trade with Cuba, 27 Fed. Reg.
1085 (Feb. 7, 1962). Thus, while Deutsch and Suchlicki are correct that President
Kennedy sanctioned Cuba during this period (and he did so under a provision of the
Foreign Assistance Act adjacent to that identified in the FSIA), these sanctions did not
lift Cubaâs immunity under the FSIA.
Accordingly, as demonstrated by the previously cited Congressional testimony
of highâranking State Department officials, Cuba was not designated as a state sponsor
of terror under the relevant provisions until 1982. Because the decision to designate a
state as a sponsor of terrorism is committed by statute to the discretion of the Secretary
of State, we often regard such official pronouncements as authoritative.29 See Vera III,
867 F.3d at 319(relying on âlegislative materials and statements by government officials submitted in this case [that] make no mention of extrajudicial killings or of the death of Veraâs fatherâ); Roeder v. Islamic Republic of Iran,195 F. Supp. 2d 140
, 160â61 (D.D.C. 29As we observed supra note 19, section 1605A expressly commits designation of a country as a âstate sponsor of terrorismâ to the discretion of the Secretary of State. See 28 U.S.C. § 1605A(h)(6). Section 1605(a)(7), the predecessor provision in effect when Hausler secured her Florida state court judgment, operated to the same effect. It abrogated the sovereign immunity of state sponsors of terrorism designated under âsection 6(j) of the Export Administration Act of 1979 (50 U.S.C. App. 2405(j)) or section 620A of the Foreign Assistance Act of 1961 (22 U.S.C. 2371).â28 U.S.C. § 1605
(a)(7)(A) (2007). Both provisions committed designation to the discretion of the Secretary of State. See 50 U.S.C. App. 2405(j)(1)(A) (2007) (requiring license for the export of goods to a country âif the Secretary of State has made the following determinations . . . [t]he government of such country has repeatedly provided support for acts of international terrorismâ);22 U.S.C. § 2371
(a) (2007) (âThe United States shall not provide any assistance
under this chapter . . . to any country if the Secretary of State determines that the government of
that country has repeatedly provided support for acts of international terrorism.â).
36
2002) (relying on State Department reports and letters to conclude that Iran was not
designated as a state sponsor of terrorism as a result of the 1979â81 hostage crisis and
rejecting contrary testimony given by an independent expert), affâd, 333 F.3d 228 (D.C.
Cir. 2003).
In sum, although Hauslerâs witnesses establish that a succession of presidential
administrations has vigorously condemned human rights abuses in Cuba, Hausler
cannot seriously dispute that it was not until 1982 that Cuba was designated a state
sponsor of terrorism, and that the record shows that the basis for the formal designation
was Cubaâs active support for violent groups acting outside of its borders. See Vera III,
867 F.3d at 318. Thus, Hausler, too, failed to adduce evidence demonstrating a specific
link between the death of her brother in 1960 and Cubaâs designation as a state sponsor
of terrorism over two decades later. Accordingly, she has failed to meet her burden to
establish that the District Court had jurisdiction over her action under TRIA section
201(a) to enforce her Florida state court judgment.
We conclude, therefore, that the terrorism exceptionâthe sole potential basis for
subjectâmatter jurisdiction in this caseâapplied neither to Hausler nor the Villoldosâ
actions before the District Court. Hausler and the Villoldos thus did not hold valid
judgments against Cuba enforceable under TRIA section 201(a); the District Court
lacked jurisdiction over the enforcement proceeding; and the District Courtâs orders
requiring BBVA and other banks to turn over blocked Cuban assets to all three groups
of Appellees (Hausler, the Villoldos, and Vera) were void for want of jurisdiction.
37
II. Restitution of funds turned over to Appellees
Having determined that the District Court lacked subjectâmatter jurisdiction over
the Villoldo and Hausler enforcement actionsâand having earlier decided the same
with respect to Vera in Vera IIIâwe now confront the consequences of these rulings.
The District Court declined to stay execution of its turnover orders pending
BBVAâs appeal from the courtâs final judgment. For the reasons set forth above, we
conclude that these turnover orders were void ab initio. BBVA has requested that, if
such a result is reached, this Court order all three Appellees to make restitution to
BBVA of the funds that they received under the invalid turnover orders. Appellees
counter that restitution to BBVA is inappropriate because BBVA lacks its own
possessory interest in the funds. After all, Appellees argue, the funds at issue are the
property of the Cuban ImportâExport Corporation, a Cuban instrumentality that never
appeared in this case; BBVA was merely an intermediary bank that blocked the assets
under the Cuban Assets Control Regulations, 31 C.F.R. Part 515. Accordingly, Appellees
urge, once BBVA delivered the funds to the Registry of the U.S. Courts, it was
dispossessed of any interest of its own, and only the Cuban ImportâExport Corporation
or the Cuban government itself would have standing to seek their return. To this, BBVA
replies that it retains a possessory interest in the funds because (1) it is subject to
potential liability for the funds to the Cuban corporation; and (2) it is entitled to an
38
equitable lien on the monies for its expenses in diligently protecting the Cuban
corporationâs property from execution.
In considering what equity demands in this situation, we first summarize the
traditional standards applicable to requests for restitution and then consider their
application here.
The Supreme Court has long ago observed that â[t]he right to recover what one
has lost by the enforcement of a judgment subsequently reversed is well established.â
Baltimore & O.R. Co. v. United States, 279 U.S. 781, 786(1929). This wellâestablished right may be tempered, however, by application of equitable principles. Thus, the most recent Restatement of the law of restitution offers this qualified statement: âA transfer or taking of property, in compliance with or otherwise in consequence of a judgment that is subsequently reversed or avoided, gives the disadvantaged party a claim in restitution as necessary to avoid unjust enrichment.â Restatement (Third) of Restitution and Unjust Enrichment § 18 (Am. Law Inst. 2011) (emphasis added). Because an order of restitution is generally seen as discretionary, we consider whether âthe money was received in such circumstances that the possessor will give offense to equity and good conscience if permitted to retain it.â Atl. Coast Line R. Co. v. Florida,295 U.S. 301, 309
(1935).
In conducting this inquiry, we are mindful of the Restatementâs comment that a
judgment debtorâs âentitlement to restitution may not be resisted merely on the ground
that an invalid judgment gave effect to what was, in any event, a moral obligation owed
to the judgment creditor.â Restatement (Third) of Restitution and Unjust Enrichment
§ 18 cmt. e (Am. Law Inst. 2011) (emphasis added). Instead, the Restatement ties an
39
entitlement to restitution to the legal validity of the underlying debt or liability,
explaining that, while â[a]n invalid or erroneous judgment that gives effect to a valid
liability does not create unjust enrichment,â a ârestitution claim based on legal
compulsion stands on a different footingâ when it is based on âmoney . . . paid to satisfy
a claim that is valid in equity and good conscience yet legally unenforceable.â Id.
(emphases added). Thus, when a debtor has been âcompelled by law to pay a claim that
is not legally enforceable . . . [t]he need to remedy this misapplication of legal process . .
. constitutes an important reason for restitution that is independent of the
individualized equities of the parties.â Id.
Appelleesâ immense default judgments against Cuba reflect the horror of those
acts that Cuba is alleged to have committed against their family members between 1959
and 1976. In determining whether Appellees were âunjustly enrichedâ for equitable
purposes by receiving the funds they have collected, however, we must weigh the legal
validity of their underlying claims, not the relative moral standing of the parties. Here,
as set forth in Section I.C, supra, Appellees articulate no sound or even plausible
jurisdictional basis under section 1605A for their claims or for the judgments entered.
This void suggests that the consequent turnover orders are not expressions of an
underlying âvalid liabilityâ that some merely ancillary technical ground has made
unrecoverable.30 Rather, Appellees have collected substantial funds pursuant to void
30 Vera argues that his receipt of an amended state court judgment in 2018, specifically finding
that the terrorism exception to sovereign immunity is established in his case, creates a valid
liability such that he has not been unjustly enriched. However, it does not appear that Vera has
taken any steps to register that judgment in federal district court as would be necessary to
create an enforceable debt. Relatedly, the Florida state court judgments entered for Hausler and
40
turnover orders in a case where the District Court had no basis in law for exercising
jurisdiction. We are compelled in these circumstances to rule that restitution is
warranted.
The unavoidability of this conclusion is underscored by our prior rulings. In Vera
II, in which we dismissed BBVAâs attempt to directly appeal the District Courtâs
turnover orders, we held that we lacked appellate jurisdiction because the orders did
not effect injunctive relief of the type that is immediately appealable, and because BBVA
could not show that the orders ââ(1) might have a serious, perhaps irreparable
consequence; and (2) can be effectually challenged only by immediate appeal.ââ Vera II,
651 Fed. Appâx at 26 (quoting Bridgeport Guardians, Inc. v. Delmonte, 537 F.3d 214, 220(2d Cir. 2008)). The turnover orders did not work an irreparable harm on BBVAâs interests, we reasoned, because âthe mere loss of funds pending final judgment can be remedied on appeal through recovery of the funds with interest.âId.
And, in May 2017, when the District Court denied BBVA a further stay and ordered that the funds deposited in the Court Registry be disbursed to Appellees, it expressly relied on this statement. See Vera v. Republic of Cuba, No. 12âCVâ1596 (AKH),2017 WL 4350568
, at *2
(S.D.N.Y. May 25, 2017) (âAs the Second Circuit held when denying BBVAâs appeal for
lack of jurisdiction, BBVA has failed to show that the Turnover Order would âhave a
serious, irreparable consequenceâ because âthe mere loss of funds pending final
judgment can be remedied on appeal through recovery of the funds with interest.ââ).
Indeed, with subjectâmatter jurisdiction at the very least an open question throughout
the Villoldos do not create a liability independent of the FSIA claims registered in federal
district court, which we void with this opinion.
41
this proceeding, the Villoldos, Hausler, and Vera all can fairly be said to have assumed
the risk of sustaining an adverse ruling on appeal when they opposed BBVAâs stay
motion and sought execution of the turnover orders before appellate review was
complete. See PSM Holding Corp. v. Natâl Farm Fin. Corp., 884 F.3d 812, 823(9th Cir. 2018) (judgment creditor âassumed some amount of risk when it opted to execute on the judgment while an appeal was pendingâ); Strong v. Laubach,443 F.3d 1297, 1300
(10th
Cir. 2006) (same).
In reaching our decision, we acknowledge the complexities surrounding BBVAâs
possessory interest in the funds. On the one hand, we agree with Appellees that BBVAâs
concern about confronting double liability is speculative at best. And, even if BBVA
might be entitled to an equitable lien on the funds to the extent it has sustained costs
related to its vigorous defense of the Cuban corporationâs assets, it has not yet
presented any documentation of the attorneyâs fees that it has incurred in this action,
and its entitlement to recover them may, in any event, be subject to legitimate dispute.
On the other hand, we note that, even if BBVA does not have a possessory interest in
the funds, it may well have an interest in completing the transfer of the funds to the
Cuban Import Export Corporation, now that the funds transfer is no longer blocked by
the United States.31
We ultimately conclude, however, that the strength (or weakness) of BBVAâs
interest in the funds does not provide an adequate basis for denying restitution to
BBVA. When a party seeks restitution of funds collected from it pursuant to an invalid
31 The U.S. government unblocked the funds in 2015. See 31 C.F.R. § 515.584(e).
42
judgment, it is not ordinarily required to establish the nature of its possessory interest
in the lost funds. Rather, the baseline rule in this Circuit is that âa party against whom
an erroneous judgment or decree has been carried into effect is entitled, in the event of a
reversal, to be restored by his adversary to that which he has lost thereby.â LiButti v.
United States, 178 F.3d 114, 120(2d Cir. 1999); see also In re Craigâs Stores of Texas, Inc.,402 F.3d 522, 525
(5th Cir. 2005) (â[W]hen the underlying litigation was dismissed for lack of jurisdiction, the disputed registry funds should have been disbursed back to the party that deposited them in the registry.â). Of course, we may decline to apply this rule if equitable considerations counsel otherwise. See LiButti,178 F.3d at 120
(â[T]his
rule is not without exceptions.â). But as discussed above, the equitable considerations at
play in such a restitution analysis principally concern whether restitution is necessary to
avoid unjustly enriching the party that benefited from the enforcement of an invalid
judgment. For the reasons already stated, we conclude here that Appellees were
unjustly enriched by enforcement of the void turnover orders, and that equity and good
conscience require restoration of the status quo ante, particularly given (1) the absence of
an underlying valid liability, and (2) Appelleesâ decision to seek execution of the
turnover orders, notwithstanding the substantial and apparent risks that the orders
were vulnerable to reversal on appeal. Accordingly, we direct the District Court on
remand to enter an order requiring restitution by Appellees of the funds that BBVA
paid them under the void turnover orders. We have reviewed the partiesâ additional
arguments and conclude that they are unavailing.
43
CONCLUSION
The District Court lacked subjectâmatter jurisdiction over this enforcement
proceeding under TRIA. The turnover orders that it issued in the enforcement
proceeding were void ab initio. Accordingly, we REVERSE the judgment of the District
Court, VACATE the turnover orders, and REMAND the cause to the District Court with
instructions to (1) dismiss the amended Omnibus Petition and (2) issue an order
directing Appellees to return to BBVA the funds that BBVA paid them under the void
turnover orders.
JOSĂ A. CABRANES, Circuit Judge:
I join the judgment of the Court.
44