Family of Man Executed in Cuba Denied Access to Funds
Mark Hamblett, New York Law Journal
October 29, 2014
The family of a man summarily executed by the Castro regime in 1960
cannot access electronic funds frozen in banks under U.S. government
sanctions against Cuba, a federal appeals court has ruled.
The U.S. Court of Appeals for the Second Circuit said the family of the
late Robert Fuller cannot attach funds blocked under the Cuban Assets
Control Regulations, pursuant to §201 of the Terrorism Risk Insurance
Act of 2002, to satisfy a default judgment against Cuba.
The circuit, applying new case law stating that only funds directly
deposited into banks by a state sponsor of terrorism can be attached,
found insufficient the link between Cuba and the funds the family wants
to access to satisfy a $400 million default judgment they won in Florida.
The circuit reversed Judge Victor Marrero (See Profile) in Hausler v.
JPMorgan Chase Bank, 12-1264, the latest in a series of cases limiting
the ability of attorneys to seize blocked funds from sponsors of
terrorism to collect on judgments.
The decision came Friday, one day after the circuit agreed in
Calderon-Cardona v. The Bank of New York Mellon, 12-075, that North
Korea’s removal from the list of countries considered state sponsors of
terrorism meant plaintiffs could not attach some $378 million in
electronic fund transfers (EFTs) that were blocked under the U.S.
sanctions regime against North Korea (NYLJ, Oct. 27).
In Calderon-Cardona, Judges Peter Hall (See Profile), Gerard Lynch (See
Profile) and Susan Carney (See Profile) also dealt with circuit case law
on the attachment of “mid-stream” EFTs, stating that an EFT blocked in
midstream is the property of a foreign state subject to attachment “only
where the state itself or an agency or instrumentality thereof …
transmitted the EFT directly to the bank where the EFT is held pursuant
to the block.”
Part of Calderon-Cardona was then remanded to a lower court to determine
if, in fact, North Korea had directly sent any of the EFTs to defendant
Hausler, a case that was argued with Calderon-Cardona on Feb. 11, 2013,
did not present the same factual set up to Judges Hall, Lynch and Carney.
Robert “Bobby” Fuller was an ex-U.S. Marine who owned a sugar plantation
in Cuba. In October 1960, in a period of less than 24 hours, he was
arrested by the Castro regime, accused of disloyalty and executed by
The Hausler-Fuller family brought suit against Cuba and other defendants
under the Foreign Sovereign Immunities Act, 28 U.S.C. §1602 and won a
default judgment in state court in Miami-Dade County, Florida for a
combined $400 million in compensatory and punitive damages.
Garnishment actions in Florida were ultimately transferred to the
Southern District, where garnishee banks and other adverse claimants
argued the blocked EFTs are not attachable assets of Cuba under the
Terrorism Risk Insurance Act (TRIA) and Marrero ruled against the banks.
The TRIA was an effort by Congress to allow victims of terrorism to
recover monies otherwise blocked. But in arguing for amicus curiae the
United States in both Hausler and Calderon-Cardona, Assistant U.S.
Attorney David Jones said the TRIA only permits attachments of blocked
assets in which a terrorist party has an ownership interest, that the
language in TRIA is far less expansive than the Cuban Assets Control
Regulations and that such an ownership interest could not be shown.
In Calderon-Cardona, the plaintiffs were seeking to attach blocked funds
to satisfy a judgment based on North Korea’s provision of weapons to the
Japanese Red Army and the Popular Front for the Liberation of Palestine,
weapons used in an attack a Israel’s Lod Airport in 1972.
The TRIA is read in tandem with the Foreign Sovereign Immunities Act,
which carves out terrorism-related exceptions to sovereign
immunity—including allowing for the attachment of the property of
“terrorist parties” under the TRIA.
In a per curium opinion in Hausler, Hall, Lynch and Carney said that,
like Calderon-Cardona, the court has to interpret New York State law to
determine the status of EFTs blocked midstream—an issue that has
generated a lot of case law in the last five years—in the context of the
Cuban Assets Control Regulations.
In Shipping Court of India Ltd. v. Jaldhi Overseas PTE, 585 F.3d 58, the
circuit stopped a flood of maritime attachments in the Southern District
when it held that EFTs of which the defendant is a beneficiary cannot be
attached (NYLJ, Oct. 19, 2009).
Then, in Export-Import Bank of the United States v. Asia Pulp & Paper
Co., 09-2254-cv, the circuit held that midstream transfers passing
through intermediary banks cannot be garnished (NYLJ, June 28, 2010).
Finally, in Calderon-Cardona, the court quoted Jaldhi and said “the only
entity with a property interest in the stopped EFT is the entity that
passed the EFT on to the bank where it presently rests.”
And because in Hausler it was “undisputed that no Cuban entity
transmitted any of the blocked EFTs directly to the blocking bank,” Cuba
and its agents and instrumentalities have no property interest in the
blocked funds that can be attached by the plaintiffs.
David Baron, James Perkins, Robert Charrow and Laura Klaus of Greenberg
Traurig represent the Hausler-Fuller family.
James Kerr of Davis Polk & Wardwell and Kenneth Caruso of White & Case
argued for the banks at the Second Circuit. The lawyers declined comment
on behalf of their clients.
Source: Family of Man Executed in Cuba Denied Access to Funds | New York
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